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Reports Year : 2009

Should small countries fear deindustrialization?

Abstract

Will small countries deindustrialize when opening up to trade with large countries? Davis (1998) shows that for the home market effect to lead to deindustrialization of small countries, trade costs for homogenous goods must be sufficiently smaller than trade costs in differentiated goods, a condition which is not supported by empirical evidence. We show that if differentiated goods production uses tradeable inputs small countries can become deindustrialized when trading with a sufficiently large
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Dates and versions

hal-00489273 , version 1 (04-06-2010)

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  • HAL Id : hal-00489273 , version 1

Cite

Tomasz Michalski, Ai-Ting Goh. Should small countries fear deindustrialization?. 2009. ⟨hal-00489273⟩

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