Country Size, Technology and Manufacturing Location

17 Pages Posted: 17 Jan 2012

See all articles by Kyle Handley

Kyle Handley

University of Michigan, Stephen M. Ross School of Business

Date Written: February 2012

Abstract

Country size, technology and trade costs jointly affect the location of manufacturing activity. In this paper, the combined effects of country size and technology differences on manufacturing location are examined in a simple new economic geography model. The specification yields a closed‐form, analytic relationship between measures of relative productivity, country size and trade costs. The patterns of agglomeration are consistent with recent empirical evidence. Market and supplier access favor manufacturing agglomeration in large countries for high to intermediate trade costs. High productivity countries, however small, are favored for low trade costs. The model's tractability facilitates welfare analysis.

Suggested Citation

Handley, Kyle, Country Size, Technology and Manufacturing Location (February 2012). Review of International Economics, Vol. 20, Issue 1, pp. 29-45, 2012. Available at SSRN: https://ssrn.com/abstract=1986586 or http://dx.doi.org/10.1111/j.1467-9396.2011.01005.x

Kyle Handley (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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