Research Papers in Economics, Department of Economics, Stockholm University
Political Participation, Regional Policy and the Location of Industry
Abstract: This paper analyzes the location of manufacturing
activities when regional policy is determined by each region’s relative
propensity to vote. Once voting over government transfers to regions is
included in an economic geography framework with size asymmetries, the
standard prediction that the larger region becomes the core when trade
barriers are reduced no longer holds. The establishment of manufacturing
production in the economically smaller region is increasing in the level of
regional integration. As trade is increasingly liberalized, the economy
eventually features a reversed core-periphery equilibrium where all firms
reside in the South. It is further shown that the relative political
participation rate increases in the factor scarce region as trade is
liberalized. Empirical evidence shows that the model is consistent with
qualitative features of the data.
Keywords: Economic Geography; Regional Policy; Voter Turnout; (follow links to similar papers)
JEL-Codes: D72; F12; R12; (follow links to similar papers)
49 pages, April 14, 2010
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- This paper is forthcoming as:
Wiberg, Magnus, 'Political Participation, Regional Policy and the Location of Industry', Regional Science and Urban Economics.
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