Bush on numerous occasions. It is one of the economists most prestigious and influential in the world and already won the John Bates Clack Medal, awarded every two years by the American Economic Association in 1991. As indicated in the quoted information is important to delve into the scope, implications that generates his theory and is drawn on it, that the patterns of trade and location have always been key issues in the economic debate. What are the effects of free trade and globalization? Are what forces influencing the exponential growth of urban areas across the globe? The American professor has formulated a new theory to answer these questions, for which data from the research of international trade with economic geography has crossed. Krugman’s approach is based on the premise that many goods and services can occur more cheaply in large series, something peculiar to the economies of scale, while consumers have to sue an increasing variety of goods and services. As a result, the small scale production of local economies is being progressively replaced by production on a large scale in the global economy, dominated by companies that manufacture similar products and that compete with each other.
Classical theories about trade patterns argue that countries differ among themselves, which explains why some Nations export agricultural products while others export goods industrial or steel, for example. Review of Krugman gives an explanation to why international trade is dominated by countries not only characterised by having similar economic conditions, and defend the classics, but also for trade with similar products – an example would be Sweden, country that both imports and exports cars-. According to the Professor, this type of trade facilitates the specialization of the large-scale production, which in turn has an impact on a decrease in prices and grow a wide variety of consumer goods. Economies scale, combined with low transportation prices also help to explain why people tend to concentrate in cities undergoing economic and in similar geographic locations. They can lead to low prices of transport and autorreforzar these processes through which the metropolitan population growth contribute to the increase of this large-scale production, which in turn causes an increase in real wages and a greater diversity of supply of goods and goods: thus stimulates migration to the cities. Krugman’s theories have shown that the consequence will be the growth of urban regions increasingly divided into two areas, in the style of Silicon Valley, in California: a zone dominated by the high-tech, surrounded by a periphery in much less developed expansion. In 2007, the theory of mechanisms, remember that last year, the winners were Americans Leonid Hurwicz, University of Minnesota; Eric S.
Maskin of the Institute for advanced study in Princeton and Roger B. Myerson, of the University of Chicago, by their joint contribution to establishing the foundations of the theory for the design of mechanisms, which explains why some economic models are more efficient than others. In his first statements after learning of the award, Krugman referred to the current global economic crisis and said that, although the world economy could face a recession on a large scale, surely be avoided collapse. The laureate also praised efforts by world leaders to overcome the crisis, while he had recently warned that approved in United States rescue plan has no rhyme or reason because they aid without conditions nor counterparts. original author and source of the article.