How does Krugman’s center-periphery theory differ from Friedman’s center-periphery theory?

1. The center-periphery theory was originally described by Prebisch in 1949 to describe the confrontation between Western capitalist countries and developing countries in the international trade system. Friedman introduced it to regional economics in 1966.

2. Friedman’s center-periphery theory means that areas can be divided into central areas and peripheral areas.

Its structural pattern is that the periphery of the central area is the upper transition zone, and the periphery of the upper transition zone is the lower transition zone. The upper transition zone surrounds the central area, showing an economic upward trend. The lower transition zone is mostly located in remote rural areas. It includes areas where raw materials are exhausted and old industries are moving toward decline. Between the two transition areas and a resource frontier area, there are rich resources to be developed and have great potential value for regional development.

The central area and the peripheral area interact. On the one hand, the central area attracts production factors to the peripheral area and produces a large amount of innovation; on the other hand, this innovation continuously spreads to the periphery, guiding the development of the peripheral area. The transformation of economic activities and social and cultural structures promotes the development of the entire spatial system. There are also three basic spatial processes in the center and periphery: the dissemination of decisions, the migration of immigrants, and the transfer of investment.

3. Dixit and Stigliz formalized monopolistic competition, gave birth to new trade theory and location choice theory, and established the D-S model of the dilemma between economies of scale and diversified consumption

4. In 1991, Krugman improved the D-S monopolistic competition model and constructed a two-region model of agriculture and industry through the Cobb-Douglas function, and concluded that it would eventually generate an internal model with the industrialized area as the center and the agricultural area as the periphery. The formation of the center-periphery structure depends on transportation costs, economies of scale, and the proportion of manufacturing in national income. The emergence of trade is not entirely due to the existence of comparative advantages, but also to the increasing returns generated by economies of scale.