In these series of lectures, later turned into a brief book, Paul Krugman makes a handful of concise arguments about the relationship between geography and trade. But these concise arguments are deep and filled with significance for understanding how both issues affect the fate of nations, and of regions inside nations.
First, Krugman shows why history determines the location of manufacturing clusters. He demonstrates that once a certain amount of manufacturing firms and workers locates in certain region, the existence of transport costs induce other firms to locate in those regions to both provide inputs to firms and goods to the workers. This also goes for the "localization" of certain industries, which benefit from the more certain work that can come from "labor pooling" in related industries, even if those localized clusters arose almost randomly. One example given is of bedspreads in Dalton, Georgia, due to Catherine Evans's discovery of a kind of "tufting" in 1895 that led to new quilting factories locating there, or the rise of jewelry manufacturing in Providence, Rhode Island, after a local man created "filled gold" there in 1794. After these humble beginnings, laborers attracted firms, and vice versa, lowering costs for all.
Finally, Krugman shows that as nations break down trade barriers, they become more "differentiated," and regions inside them assume increased importance. As he shows, the European Unions manufacturing industries are actually more "similar" across countries, than the manufacturing industries across states of the US (most European countries have their own automobile and electronic clusters, while in the US those are localized). As countries "integrate" they also become, ironically, more different economically.
This book demonstrates why, whatever you think of his later political writing, Krugman's innovative and insightful economics work warranted the Nobel Prize in 2008, and why it has reshaped the realms of the economics of international trade and economic geography ever since.