Shifts in economic geography and their causes, in

Recent decades have seen momentous changes in the economicgeography of the world. Political transitions and economic lib eralization have brought formerly closed countries into the world economy. In Richard Freeman’s phrase, this has amounted to a “doubling of the world labor force. ” The collapse of communism in the Soviet bloc brings 260 million workers into the world labor force, the opening up of China adds a further 760 million, and Indian liberaliza-tion 440 million. At the same time technological change has continued to reduce the cost of interactions within and between countries. Any product that can be digitized can now be shipped at (almost) zero cost. Airfreight accounts for a third of U.S. imports by value, and 25 percent of African exports are now airfreighted. For the U.S., the value of time saved by airfreight and containerization has been estimated as some 12-13 percent of the value of goods shipped (Hummels 2000). Some of these changes—falling trade and communications costs— have been going on for centuries, although interrupted by periods of increasing tariffs and closure of economies. Some have possibly come to Anthony J. Venables is a professor of international economics at the London School o