Krugman's Nobel Lecture

Paul Krugman's lecture explains his Nobel prize winning research on international trade geography.

Interesting points that come out of his research:

1) Contrary to intuitive thinking, trade has become more sensitive to distance, not less. This doesn't mean that far-away countries are doing less trade, but that regional countries are doing more trade.

2) Intra-industry trade among largely similar countries accounts for a large percentage of regional trade.

3) Thinking in terms of the geographic clustering of manufacturing (ex. the manufacturing belt in the northeastern U.S.) is no longer an adequate description of the present geography of production in advanced countries. The results have been a decrease in high-wage manufacturing jobs for citizens in advanced countries due to increased competition by foreign owned manufacturing plants who pay lower wages in advanced countries.

You can watch the lecture here.