TY  - JOUR
AU  - Krugman,Paul
AU  - Venables,Anthony J.
TI  - Globalization and the Inequality of Nations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5098
PY  - 1995
Y2  - April 1995
UR  - http://www.nber.org/papers/w5098
L1  - http://www.nber.org/papers/w5098.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

Anthony Venables
Department of Economics
University of Oxford
Manor Road Building
Manor Road
Oxford OX1 3UQ, United Kingdom
and CEPR
E-Mail: tony.venables@economics.ox.ac.uk
AB  - A monopolistically competitive manufacturing sector produces goods used for final consumption and as intermediates.  Intermediate usage creates cost and demand linkages between firms and a tendency for manufacturing agglomeration.  How does globalization affect the location of manufacturing and gains from trade?  At high transport costs all countries have some manufacturing, but when transport costs fall below a critical value a core-periphery pattern spontaneously forms, and nations that find themselves in the periphery suffer a decline in real income.  At still lower transport costs there is convergence of real incomes, in which peripheral nations gain and core nations may lose.
ER  -