The Core-Periphery Model and Endogenous Growth: Stabilizing and Destabilizing Integration

Posted: 25 May 2001

See all articles by Richard E. Baldwin

Richard E. Baldwin

University of Geneva - Graduate Institute of International Studies (HEI); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Rikard Forslid

Stockholm University; Centre for Economic Policy Research (CEPR)

Abstract

We present a model where long-run growth and industrial location are jointly endogenous by introducing Romerian product innovation growth into Krugman's core-periphery model. We focus on stability, showing that growth is a powerful centripetal force, but that knowledge spillovers are a powerful centrifugal force. Integration policies that lower the cost of trading ideas are shown to encourage dispersion of economic activity while those that lower the cost of trading goods encourage agglomeration. Agglomeration is shown to be favourable to growth in both regions. The pro-growth effects mitigate the periphery's static welfare loss from agglomeration.

JEL Classification: F1, F2, R1

Suggested Citation

Baldwin, Richard E. and Forslid, Rikard, The Core-Periphery Model and Endogenous Growth: Stabilizing and Destabilizing Integration. Available at SSRN: https://ssrn.com/abstract=247418

Richard E. Baldwin (Contact Author)

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

PO Box 136
Geneva, CH-1211
Switzerland
+41 22 908 5933 (Phone)
+41 22 733 3049 (Fax)

HOME PAGE: http://www.hei.unige.ch/~baldwin/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Rikard Forslid

Stockholm University ( email )

Universitetsvägen 10 A
House A, floor 4 and 7
Frescati, Stockholm
Sweden
+46 8 16 3096 (Phone)
+46 8 15 9482 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
931
PlumX Metrics