In this paper, we model a manufacturing and a transport sector and use export volumes to determine the demand for transport services. If trade exceeds a particular level, transport service suppliers maximise profit by investing in an advanced transport technology, which lowers their marginal...

<heading format="display" id="h1" implicit="yes" level="1">Abstract</heading> Firms cluster their economic activities to exploit technological and informational spillovers from other firms. Spillovers from multinational firms can be particularly beneficial to firms in less developed economies, because technological superiority and management expertise of foreign...