The Analytical Framework—Economic Integration and the Location of Industries: The Case of Less Developed East Asian Countries

Abstract

Geographical location of industry is affected by trade policy. For example, when a country is closed to trade, metropolitan areas would be an attractive location for industries, since that is where most of their customers, as well as their input suppliers, are located. However, once a country opens up to trade, the optimum location may change. In particular, if an industry is highly export- oriented, the advantage of being located in the vicinity of local customers or suppliers will disappear. Instead, such industries may prefer to relocate to frontier regions—such as border regions or port cities—where they can save on transportation costs of importing intermediate inputs and exporting their products abroad.KeywordsTrade LiberalizationEconomic IntegrationLocation ChoiceRegional DisparityProduction NetworkThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.