INDUSTRIAL LOCATION AND SPECIALISATION: THE IMPACT OF INFRASTRUCTURES, PRODUCTION COSTS AND MARKET SIZE IN A NORTH/SOUTH ANALYSIS

This paper aims to analyse the industrial location and the countries' specialization in a North/South model. The model is an extension of Ricci's [1999] and Martin and Rogers' [1995] models. It introduces two countries (North and South), two production factors (capital and labour) and three sectors (two industrial sectors and an agricultural sector). The comparatives advantages are introduced between two industrial sectors and not between the agricultural sector and the indutry. These comparatives advantages encompass a difference in productivity per sector/country and a difference in wages per county. This hypothesis introduce a "market size effect" and underline the necessity of considering these two variables separately. Moreover, the quality of the countries' infrastructures influence firmes' location. To avoid a desindustrialization or a specialization in a not very technological sector, the south has to increase its market size and to improve its industrial productivity.