Customer Reviews

Geography and Trade (Gaston Eyskens Lectures)

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Krugman's book is readable and thought-provoking. As other reviewers have noted, it's not all brand new or groundbreaking (which makes sense given that it was a series of lectures). But this is not a shortcoming for the non-expert reader, nor really for economists who have paid too little attention to amazing patterns and idiosyncrasies of agglomeration.

For me, the highlight of the book is Krugman's recognition of the historical indeterminacy of agglomeration. Agglomeration dictates the general patterns of development, but historical coincidences change the specific place and time of actual development. Full of both abstract models and concrete examples, this is useful and entertaining book!

Krugman's small book contains a lot of insights regarding geography and regional trade. The use of simple models to increase our understanding of ideas that some might refer to as "common sense" is actually the strength of the book (not a drawback at all). The ideas are less applicable to international trade since factors of production are assumed perfectly mobile. The book does, however, provide a framework for thinking about trade between countries that differ from traditional international trade theory. I highly recommend the book.

In this little and clearly written book Prof. Krugman asks two important questions, which are in the centre of geography for a long time. These two questions are: why is production spatially concentrated ? and why are particular industries often highly localized ? starting with the empirical example of the manufacturing belt in the U.S. Prof. Krugman developes a simple model which shows that the interaction of increasing returns, transportation costs and demand can result into the spatial concentration of the whole manufacturing sector. The causes of industrial localization, Prof. Krugman argues, are external economies like labor market pooling, pecuniary externalities through intermediate inputs and technological spillovers between firms. Again, Prof. Krugman uses some simple models to get to his point. Some may argue that the results of these simple models are obvious. This is right but with his models Prof. Krugman gives the geographic community a much more powerful ! tool of analysis as just story-telling or statistical explorations.

This book does more to point out the authors lack of awareness of a large body of literature in a field known as regional science than it does to enlighten the reader on the subject. Nonetheless, it contains a lively, readable discussion of the importance of agglomeration economies for those who have had little formal background in economics. The concepts developed in it are properly laid out, albeit in a fashion akin to that in beginning chapters of Walter Isard's 1956 tome entitled "Locaton and Space Economy." Indeed, much of the material is covered better in Isard's book and in Edgar M Hoover "The Location of Economic Activity" written in 1948. Appendices contain more theoretic analytic treatments of the material, although some of Krugman's more recent publications do a far better job.

In the final chapter Krugman attempts to put the book in perspective of broader present-day questions. He investigates the extent to which barriers to trade might interfere with comparative advantage and agglomerative tendencies. He then attempts to determine whether Europe's small countries should fear economic integration and whether their regions will be at a disadvantage compared to larger European nations. Not surprisingly. however, he tells us that the answer to both is something like "it depends." That is, the answer to each of these questions relies on the area's proximity to the geographic center of Europe's economy.

Geography and Trade is not what one would envision from the 1992 John Bates Clark Award of the American Economics Association. As Krugman becomes aware of the regional science literature, however, I am sure his work will become more interesting to regional economists.

This book presents economies of scale in manufacturing as an explanation underlying international trade. The theory is quite good albeit simple. Also presented is a empirical study showing how industry concentration and trade are related. For its short length quite good. More in-depth work, especially empirical, needs to be made along the lines implied by this book. Definitely a step forward in international trade theory.

That it has taken an economist to highlight the role of space in spatial economic development is an indication of the failure of geographers to do the same with mathematical models (they've had more time to do it...). Regional science has long held the view that space matters, yet geography has not come up with sufficiently rich models to explain why. Dr Krugman has provided a valueble service to making geography matter more in ecomonics. Perhaps it is time for economics to matter more in space?

It is great that Krugman is promoting space to the world of Economics but he hasn't brought much to the table of economic geography that wasn't already there. However, as the author's knowledge increases in the subject area, geographers would be advised to keep tabs on his work as the field is lacking in formal models.

This small book has some interesting things to say about location and economic activity (though I wished there would have been more on the way of examples). It is surprising, though, that Krugman never mentions one reason why labor mobility it's not (and, in all probability, will never be) as high in the European Union as it is in the United States: the fact that European workers speak different languages (OK, many speak english, but many don't, and one almost surely is bound to be less good working in a second language than in a native one).