Globalization, interregional and international inequalities

This paper examines the impact of globalization on interregional and international inequalities in a setup of two countries and four regions, under international mobility of capital. In contrast to the literature, countries and regions are not required to be symmetric. We find that the aforementione...

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Bibliographic Details
Published in:Journal of urban economics 2010-05, Vol.67 (3), p.352-361
Main Authors: Zeng, Dao-Zhi, Zhao, Laixun
Format: Article
Language:English
Subjects:
Capital mobility
Economic inequality
Economic theory
Firm location
Globalization
Inequality
Inequality Firm location Infrastructure Globalization
Infrastructure
International trade
Location of enterprises
Regional analysis
Studies
Transport costs
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Summary:This paper examines the impact of globalization on interregional and international inequalities in a setup of two countries and four regions, under international mobility of capital. In contrast to the literature, countries and regions are not required to be symmetric. We find that the aforementioned inequalities are closely related to the country size, region size, the degree of globalization (e.g., capital mobility and trade costs) and the level of local infrastructure. In particular, international trade behaves as a dispersion force when capital is internationally mobile for small countries such that reducing domestic transport costs lowers its interregional inequality, but the opposite can be true for large countries or when capital is internationally immobile.
ISSN:0094-1190
1095-9068
DOI:10.1016/j.jue.2009.11.002