RegionalContextandGlobalTrade

RegionalContextandGlobalTrade - 1 REGIONAL CONTEXT AND...

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REGIONAL CONTEXT AND GLOBAL TRADE 1 Michael Storper Professor, Sciences Po, LSE, UCLA michael.storper@sciences-po.fr , m.storper@lse.ac.uk This version: July 29, 2008 Forthcoming: Economic Geography, January 2009 Abstract How should we think of the role of regions in relationship to the global economy? Theory has surprising gaps when it comes to building a unified vision of these two scales of development. Two contributions to such a vision are proposed in this paper. First, the relationship between geographical concentration and the regional economic specialization it underpins, and globalization, should be theorized as a dynamic process. Standard location and trade theory is not adequate for this task; instead, the dynamical relationship can be captured through growth theory. But this in turn requires correcting growth theory to separate its local and its global components, respectively Marshall-Arrow from Romer externalities. Second, we consider the missing element in all theories of geographical concentration and locally-specialized development, an element labeled “context” here. A theory of context in turn raises important new questions about the dynamic welfare and developmental effects of contemporary processes of fragmenting and re-locating production at a global scale. JEL: D62, F12, F15, R12 1 An earlier version of this paper was delivered as the Roepke Memorial Lecture at the AAG Annual Meeting in Boston, March 2008, as well as at the DRUID Summer Conference in Copenhagen (June 2008). This version benefited from the comments made at both those meetings. I would particularly like to thank Gilles Duranton, Anders Malmberg, Jim Love and Stefano Breschi for acting as discussant on the paper, and Peter Maskell for including it on the DRUID program. Yuko Aoyama encouraged me to prepare this paper for publication, and the editors of Economic Geography provided many useful points for clarifying the argument. Markus Perkmann and Ewald Engelen provided me detailed criticisms that helped in revising the paper, and participants at the Society for Advancement of Socio-Economics in San José, Costa Rica (July 2008) offered a number of stimulating new points that also helped in restructuring the initial argument. Any errors are the sole responsibility of the author. 1
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1 . Regional variety and the gains from trade The combined effects of the division of labor, regional specialization and gains from trade are widely agreed to be one of the two main forces behind world economic growth since its modern take-off around 1820, the other being technological innovation (Mokyr, 1990; North, 2005). Contemporary debates about the geographical reshuffling of output and employment through outsourcing and off-shoring ask whether we have crossed some kind of new thresh-hold in the world division of labor. There are now increasingly fine geographical divisions of labor, not only by broad “functions,” but by “tasks,” that affect regional patterns of specialization in ways that may be unprecedented
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RegionalContextandGlobalTrade - 1 REGIONAL CONTEXT AND...

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