TY  - JOUR
AU  - Elizondo,Raul Livas
AU  - Krugman,Paul
TI  - Trade Policy and the Third World Metropolis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4238
PY  - 1992
Y2  - December 1992
UR  - http://www.nber.org/papers/w4238
L1  - http://www.nber.org/papers/w4238.pdf
N1  - Author contact info:
Paul R. Krugman
Department of Economics
Princeton University
Woodrow Wilson School
Princeton, NJ  08544
Tel: 609/258-4570
Fax: 609/258-2809
E-Mail: pkrugman@princeton.edu
AB  - Many of the world's largest cities are now in developing countries. We develop a simple theoretical model, inspired by the case of Mexico, that explains the existence of such giant cities as a consequence of the strong forward and backward linkages that arise when manufacturing tries to serve a small domestic market. The model implies that these linkages are much weaker when the economy is open to international trade -- in other words, the giant Third World metropolis is an unintended by-product of import-substitution policies, and will tend to shrink as developing countries liberalize.
ER  -