figure 14.1 james peter neary (1950 – )

International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 1

Figure 14.1 James Peter Neary (1950 – )


Figure 14.2 Zipf’s Law for India, 2010

Zipf's Law for India, 2010

-1

0

1

2

3

4

5

6

12 13 14 15 16 17ln(size)

ln(ra

nk)

Mumbai

DelhiBangalore

Kolkata


Figure 14.3 German exports and distance , 2010

German exports and distance, 2010

-6

-5

-4

-3

-2

-1

05 6 7 8 9 10 11

ln(distance)

ln(e

xpor

t)-0.

913*

ln(G

DP

) Netherlands

Japan

USA

France


Figure 14.4

Structure of the geographical economics model

N2 manufacturing firmsN2 varieties (elasticity )internal returns to scalemonopolistic competition


Farms in 1 Farms in 2

Spen

ding

1-m

m

Manufacturing workers in 2

Farm workers in 2

Consumers in 2

Farm workers in 1

Consumers in 1

Inco

me

Spen

ding

(goo

ds)

(far

m la

bor)

(labo

r)

Inco

me

(labo

r)

Inco

me

Spending on manufactures

Spen

ding

on

food

Inco

me

(far

m la

bor)

Spen

ding

on

food

1-m

mSpending on manufactures

(goo

ds)

Ta

c

b

de

f

Direction of (goods and services flows)

Direction of money flows

Mobility (i)

g




Farms in 1 Farms in 2

Spen

ding

1-m

m


Farm workers in 2

Consumers in 2

Farm workers in 1

Consumers in 1

Inco

me

Spen

ding

(goo

ds)

(far

m la

bor)

(labo

r)

Inco

me

(labo

r)

Inco

me

Spending on manufactures

Spen

ding

on

food

Inco

me

(far

m la

bor)

Spen

ding

on

food

1-m

mSpending on manufactures

(goo

ds)

Ta

c

b

de

f

Direction of (goods and services flows)

Direction of money flows

Mobility (i)

g



Figure 14.5 Division of labour over the regions

Laborers in the manufacturing sector in region 2; 2mL


Laborers in the food sector in region 1; 1(1- m)L


Laborers in the food sector (1- m)L

Laborers in the manufacturing sector; mL

Total number of laborers; L

(1-m) m

1 2 1 2

Note: 1 + 2 = 1 Note: 1 + 2 = 1 Mobility





Laborers in the food sector (1- m)L

Laborers in the manufacturing sector; mL

Total number of laborers; L

(1-m) m

1 2 1 2

Note: 1 + 2 = 1 Note: 1 + 2 = 1 Mobility


Figure 14.6 Distribution of the manufacturing labour force; three examples

a. spreading

0

0.5

1

region 1 region 2

b. agglomerate in region 1

0

1

region 1 region 2

c. agglomerate in region 2

0

1

region 1 region 2


Figure 14.7 The relative real wage in region 1; base scenario

= short-run equilibria= short-run equilibria

share of manufacturing workforce in region 10 1

11

real

wag

e re

gion

1 /

real

wag

e re

gion

2

A

DCB

E

A

DCB

EFF

= long-run equilibria= long-run equilibria


Figure 14.8 The impact of transport costs

0.9

1

1.1

0.0 0.5 1.0

share of manufacturing workers in region 1 (lambda1)

rela

tive

real

wag

e (w

1/w

2)

T = 1.3

T = 1.3

T = 1.7

T = 1.7

T = 2.1

T = 2.1


Figure 14.9 Stability: sustain points and break point (‘Tomahawk’ diagram)

Sustain points

Break point

Transport costs T10

1

1

0.5

Stable equilibria

Unstable equilibria

B

S0

S1

Basin of attraction for spreading equilibrium

Basin of attraction for agglomeration in region 1


Sustain points

Break point

Transport costs T10

1

1

0.5

Stable equilibria

Unstable equilibria

B

S0

S1




Sustain points

Break point

Transport costs T10

1

1

0.5

Stable equilibria

Unstable equilibria

B

S0

S1




Sustain points

Break point

Transport costs T10

1

1

0.5

Stable equilibria

Unstable equilibria

B

S0

S1




Sustain points

Break point

Transport costs T10

1

1

0.5

Stable equilibria

Unstable equilibria

B

S0

S1




Sustain points

Break point

Transport costs T10

1

1

0.5

Stable equilibria

Unstable equilibria

B

S0

S1





Figure 14.10 Human capital: the solvable model

Food workers 1

Manufacturing workers 1

Food workers 2

Manufacturingworkers 2

Human capital 1

Human capital 2

Food production 1

Food production 2

Manufacturing production 1

Manufacturing production 2

Consumers region 1 Consumers region 2

Inter-sectoral labour mobility

Inter-sectoral labour mobility

Inter-regional capital mobility

Producers region 1 Producers region 2

Labo

r ser

vice

s (w

age

rate

)Labor services

(wage rate)

Labo

r ser

vice

s (w

age

rate

)

Cap

ital s

ervi

ces

(ren

tal r

ate)

Capital services (rental rate)

Labor services (w

age rate)

fixed costsvariablecosts

variablecosts

Con

sum

ptio

n of

goo

ds (p

aym

ent) C

onsumption of goods (paym

ent)


Figure 14.11 The intermediate goods model

Labo

ur

inpu

tFood

production

Consumers

Manufactures production

Food workers

Manufacturing workers

IntermediatesLabo

ur

inpu

t

Inte

rmed

iate

in

put

Intermediate

production

Labour incom

e

Intersectoral labour mobility

Labo

ur

inco

me

Food consumption Manufactures consumptionshare 1- share

shar

e

shar

e 1-

Food workers

Manufacturing workers


Figure 14.12 Somali pirate territory, 2011

India

Africa

Saudi Arabia

Mad

agas

car

Ethiopia

Kenya

Somalia

Yemen

Oman

ARE

Westernmost attack 4 August 2010

Northernmost attack 15 January 2011

Southernmost attack 28 December 2010

Easternmost attack 5 December 2010

Indian Ocean

HaradeereSomali pirate

territory

Red sea

Mozambique channel

Gulf of Oman

Gulf of Aden

India

Africa

Saudi Arabia

Mad

agas

car

Ethiopia

Kenya

Somalia

Yemen

Oman

ARE





Indian Ocean


territory

Red sea

Mozambique channel

Gulf of Oman

India

Africa

Saudi Arabia

Mad

agas

car

Ethiopia

Kenya

Somalia

Yemen

Oman

ARE





Indian Ocean


territory

India

Africa

Saudi Arabia

Mad

agas

car

Ethiopia

Kenya

Somalia

Yemen

Oman

ARE





Indian Ocean


territory

Red sea

Mozambique channel

Gulf of Oman

Gulf of Aden


Figure 14.13 Welfare loss of Somali piracy for selected countries

Welfare loss of Somali pirates ($ billion)

0

20

40

60

80

100

120

140

160

180

200

EU China Japan Un ArabEm

S Arabia Brazil Australia LDC-Africa

LDC-Asia

trade costs increase 10%

trade costs increase 20%


Figure 14.14

Simulated location of European cities

figure 14.1 james peter neary (1950 – )

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