Industrial location and public infrastructure

This paper examines the impact of public infrastructure on industrial location when increasing returns are present. Trade integration implies that firms tend to locate in countries with better domestic infrastructure. High levels of international infrastructure and strong returns to scale magnify in...

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Veröffentlicht in:Journal of international economics 1995-11, Vol.39 (3), p.335-351
Hauptverfasser: Martin, Philippe, Rogers, Carol Ann
Format: Artikel
Sprache:eng
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Zusammenfassung:This paper examines the impact of public infrastructure on industrial location when increasing returns are present. Trade integration implies that firms tend to locate in countries with better domestic infrastructure. High levels of international infrastructure and strong returns to scale magnify industrial relocation due to differentials in domestic infrastructure or capital endowments. Regional policies which finance domestic infrastructure in a poor country lead firms to relocate in this country. Regional policies which finance international infrastructure in a poor country will lead firms to leave this country. We also analyze the incentives for countries to inhibit industrial relocation.
ISSN:0022-1996
1873-0353
DOI:10.1016/0022-1996(95)01376-6