Trade Openness, Transport Networks and the Spatial Location of Economic Activity

Resumen

This paper introduces a multi-country multi-regional model that allows the evaluation of the effects of trade openness in the internal distribution of economic activity across regions within countries. Relying on the agglomeration and dispersion forces characterizing the analytical framework of the NEG/NTT literature, we consider a general model with two differentiated sectors in terms of preferences, technologies and transport costs, and that allows for any feasible world trade network topology where trade frictions are both transport and non-transport related (tariffs). As benchmark simulations we choose two opposed domestic network topologies characterizing a homogenous space and a heterogenous space. Our findings show that trade openness changes locational patterns in favor of better located regions with respect to the new world topology. These results entail important implications in terms of transport infrastructure (accessibility) and trade (commercial agreements) policies, as both are related when policy makers set regional equality goals.