Geography and Trade

by Paul Krugman

"I have spent my whole professional life as an international economist thinking and writing about economic geography, without being aware of it," begins Paul Krugman in the readable and anecdotal style that has become a hallmark of his writings. Krugman observes that his own shortcomings in ignoring economic geography have been shared by many professional economists, primarily because of the lack of explanatory models. In Geography and Trade he provides a stimulating synthesis of ideas in the literature and describes new models for implementing a study of economic geography that could change the nature of the field. Economic theory usually assumes away distance. Krugman argues that it is time to put it back - that the location of production in space is a key issue both within and between nations.

Genres: Economics, Nonfiction, Geography, Business

156 pages, Paperback

First published January 1, 1991

About the author

Paul Robin Krugman is an American economist, liberal columnist and author. He is Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs, Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economics for his contributions to New Trade Theory and New Economic Geography.

Reviews

[Frank Stein · Rating 4 out of 5]

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.

[Diego · Rating 4 out of 5]

Es un gran libro de divulgación en el que Paul Krugman trae consigo su trabajo de los años 80 y 90 en temas de comercio internacional y geografía económica explicando como surgió la nueva teoría del comercio.

El libro cuenta con 3 apéndices muy buenos en los que se detallan los modelos elaborados por Krugman en 1991 y por Krugman y Elhanan Helpman en 1985. Es una gran introducción a la literatura de la nueva teoría del comercio y un libro en el que lucen las habilidades de Krugman para transmitir información económica compleja de forma amigable y sencilla.

(No le doy 5 estrellas porque la edición en Español deja que desear en términos de calidad de imprenta, la versión en Ingles tendría las 5 estrellas)

[Patrik · Rating 4 out of 5]

In this book Krugman attempts to marry economic geography (the location of production in space) to international trade theory. Although the book does not provide a complete model of the resulting “new” trade theory, it does offer many new ideas and interesting entry points for such a model (and Krugman has offered models elsewhere). An interesting and quick read.

[Justine · Rating 3 out of 5]

A rather dry set of lectures but likely owing to the fact that they are lectures and the concept is much more well established now. Think about geography alongside international borders. Still worth reading the foundational literature for my independent study and later thesis.

[Vysloczil · Rating 3 out of 5]

Good non-technical summary of Krugman's New Economic Geography and the implications of its theory.

[Jesus M · Rating 3 out of 5]

Interesante concepto de monopsonio, entre otras cosas. #graciasfran

[Marcos · Rating 3 out of 5]

Libro corto e interesante. Faltó mayor desarrollo de los modelos. Complementar el libro con los papers de krugman del 91 y 92.

[Glenn Schmelzle]

During grad school, my advising professor had me read this. I'm glad he put me on to Paul Krugman.