6. It is fairly common for an industrial cluster to break up and for production to move...

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6. It is fairly common for an industrial cluster to break up and for production to move to locations with lower wages when the technology of the industry is no longer rapidly improving—when it is no longer essential to have the absolutely most modern machinery, when the need for highly skilled workers has declined, and when being at the cutting edge of innovation conveys only a small advantage.

Explain this tendency of industrial clusters to break up in terms of the theory of external economies.

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International Finance Theory And Policy

ISBN: 9781292019550

10th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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