The Welfare Implication of an Expansion of an Industrial Zone

Tetsu, Kazuhiro

doi:2001.16.3.369

Journal of Economic Integration 2001 September;16(3) :369-378.
DOI: https://doi.org/10.11130/jei.2001.16.3.369

The Welfare Implication of an Expansion of an Industrial Zone

Kazuhiro Tetsu

Shizuoka University

ABSTRACT

The main objectives of this paper are to present a model introducing the idea of two isolated areas that have different economic features and to analyze the effects of an expansion of an industrial zone. In this model, we assume that there are two areas: one is under full employment, the other is suffering from urban unemployment. In such a two isolated area model, we show that the economic development of a rural area is attained at the cost of an urban area and that national income depends on the endowment of labor force in each area.

Keywords: Industral Zone | Export Processing Zone | Two-area Model