My comment: We all have to praise and apreciate his contribution to unveil the current trends and risks of current models and the light that he tries to put at the end of the tunnel, not a solution but a way to find a way out to geographical and human inequalities.
Here is his interiew (5 mins) and his lecture (44 mins.) http://nobelprize.org/nobel_prizes/economics/laureates/2008/krugman-lecture.html Peace and best wishes. Xi Press Release 13 October 2008 International Trade and Economic Geography Patterns of trade and location have always been key issues in the economic debate. What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions. He has thereby integrated the previously disparate research fields of international trade and economic geography. Krugman's approach is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale. Meanwhile, consumers demand a varied supply of goods. As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another. Traditional trade theory assumes that countries are different and explains why some countries export agricultural products whereas others export industrial goods. The new theory clarifies why worldwide trade is in fact dominated by countries which not only have similar conditions, but also trade in similar products – for instance, a country such as Sweden that both exports and imports cars. This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities. Economies of scale combined with reduced transport costs also help to explain why an increasingly larger share of the world population lives in cities and why similar economic activities are concentrated in the same locations. Lower transport costs can trigger a self-reinforcing process whereby a growing metropolitan population gives rise to increased large-scale production, higher real wages and a more diversified supply of goods. This, in turn, stimulates further migration to cities. Krugman's theories have shown that the outcome of these processes can well be that regions become divided into a high- technology urbanized core and a less developed "periphery". Brief information Modelling Trade in a World of Plenty In a remarkably succinct, ten-page article published in 1979, Paul Krugman proposed a new trade model that changed the way economists view the international exchange of goods. At the heart of the model lay two concepts that reflected the general twentieth century trend towards having more: the increased production of goods, leading to economies of scale, and increased diversity of products, leading to greater choice for consumers. Krugman's model better reflected the new pattern of international trade that had developed in a world where less certainly wasn't more. His model sought to explain the situation in which countries that are similar benefit by producing and trading in similar goods. Thus, cars are manufactured in France, Germany and Italy, with each country benefiting from the economies of scale delivered by mass production, and the citizens of each country benefiting from the increased choice that arises from having a global motor industry. Previous trade models had emphasized the importance of the differences between countries, with international trade being based on the production of different materials in each country to fulfil unmet needs in others. Krugman's development of a rigorous framework for describing the real world situation formed the basis for an explosion of subsequent analysis. The 1979 paper in the Journal of International Economics also sowed the seeds of an analysis of the forces driving increased urbanization. In his core-periphery model, which he developed properly in a 1991 publication, Krugman describes the opposing pressures that act on populations: those that serve to pull them into the core (urban) centres and those that work to push them out into the peripheral (agricultural) areas. For example, one such factor is the cost of transport, and the generally decreasing transport costs seen in the twentieth century have served to pull production, and populations, into urban centres. Once again, Krugman's formulation of a robust model provided the apparatus that allowed a thorough exploration of the factors driving the global distribution of production facilities, and of the urbanization that is such a prevalent feature of the modern world. By Adam Smith, Editor-in-Chief, Nobelprize.org First published 20 October 2008 Information for the Public http://nobelprize.org/nobel_prizes/economics/laureates/2008/info.html --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
