Positive and Negative Effact Of Globalization

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Globalization and the Inequality of Nations
Paul Krugman and Anthony J. Venables
The Quarterly Journal of Economics, Vol. 110, No. 4 (Nov., 1995), pp. 857-880 (article consists of 24 pages)
Published by: The MIT Press
Stable URL: http://www.jstor.org/stable/2946642

Globalization and the Inequality of Nations, by Paul Krugman and Anthony J. Venables © 1995 The MIT Press.

Abstract
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 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. Want the full article?
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