Monday, October 13

paul krugman won the nobel prize, long live global trade

One of the most interesting and exciting economist working today (and a personal hero) Paul Krugman was awarded the Nobel prize.

His work points to the future of the globalization and to the idea of the "Endless City" as more than 70% of the world is now moving to urban areas.

His work in patterns of trade and location and the effects of free trade and globalization. Paul Krugman formulated a new theory to answer these questions. He 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.

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.

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".