The New Geography of Trade

• In Event: IPE Theory in Transition

Abstract

Four key dynamics are fundamentally shaping the ways in which economic geography and trade politics intersect in the 21st century: agglomeration, regionalism, advancing technologies’ effect on how distance influences trade, and the increasing trade in services. This chapter explains those dynamics and reviews the scholarly literature around them. In the first section, after briefly reviewing the foundational research on trade and geography (gravity models, New Trade Theory, and New New Trade Theory) which emerged in the 1980s-2000s, I discuss more recent work on agglomeration and the ambivalent impacts that has had, highlighting both the wealth creation generated by this commercial clustering but also noting the susceptibility to external shocks and political revanchism associated with it. In the second section, I investigate how regionalism has both thickened but also become more complex. In the third section, I analyze how improving technologies such as AI and 3D printing are altering the impact geography has on trade as well as what political implications that may have. In the final section, I look at how the burgeoning trade in services is changing trade politics.

Author

• Gary Winslett, Middlebury College