figure 14.1 james peter neary (1950 – )
DESCRIPTION
Figure 14.1 James Peter Neary (1950 – ). Figure 14.2 Zipf’s Law for India, 2010. Figure 14.3 German exports and distance , 2010. Figure 14.4 Structure of the geographical economics model . Figure 14.5 Division of labour over the regions . - PowerPoint PPT PresentationTRANSCRIPT
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 1
Figure 14.1 James Peter Neary (1950 – )
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 2
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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 3
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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 4
Figure 14.4
Structure of the geographical economics model
N2 manufacturing firmsN2 varieties (elasticity )internal returns to scalemonopolistic competition
N1 manufacturing firmsN1 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
Manufacturing workers in 1
N2 manufacturing firmsN2 varieties (elasticity )internal returns to scalemonopolistic competition
N1 manufacturing firmsN1 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
Manufacturing workers in 1
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 5
Figure 14.5 Division of labour over the regions
Laborers in the manufacturing sector in region 2; 2mL
Laborers in the manufacturing sector in region 1; 1mL
Laborers in the food sector in region 1; 1(1- m)L
Laborers in the food sector in region 2; 2(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 manufacturing sector in region 2; 2mL
Laborers in the manufacturing sector in region 1; 1mL
Laborers in the food sector in region 1; 1(1- m)L
Laborers in the food sector in region 2; 2(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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 6
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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 7
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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 8
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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 9
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
Basin of attraction for agglomeration in region 2
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
Basin of attraction for agglomeration in region 2
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
Basin of attraction for agglomeration in region 2
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
Basin of attraction for agglomeration in region 2
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
Basin of attraction for agglomeration in region 2
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
Basin of attraction for agglomeration in region 2
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 10
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)
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 11
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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 12
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
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
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
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
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 13
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%
International Economics: Theory, Application, and Policy, Ch. 14; Charles van Marrewijk, 2012 14
Figure 14.14
Simulated location of European cities