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George Washington University

Publication Date

Spring 2008

Program Name

Chile: Economic Development and Globalization


In the year 1996 economists Paul Krugman and Livas Alizondo published a study addressing the correlation between the degree to which a country’s economy is open to foreign pressures and competition and the degree to which the country experiences the phenomenon of urban concentration. However, in 2003 another economist, Olga Alonso-Villar published another study that presents evidence against Krugman and Elizondo’s argument. This study states that after an extended period of time, during which an economy has been closed to foreign pressures and competition, such as Chile and other Latin American countries during the era of import substitution industrialization, when an economy suddenly opens itself to world markets y foreign influences, the phenomenon of urban concentration will continue in stead of reducing in severity due to the domestic companies not having as much competitiveness en relation to the foreign companies now in country. Therefore, companies will continue to locate themselves en the dominant city of the country in order to take advantage of the large internal market in stead of competing abroad y relocating to rural areas. Therefore, the purpose of this study has been to find evidence in the field to begin to see which theory applies more in reality. The case of Santiago, Chile has been the location of the study, using a domestic company and organization as preliminary evidence. However, the gamut of the study has been broadened to also include foreign companies in Santiago in order to research the reasons why they are still concentrating themselves in Santiago y not in other places throughout Chile.


Economics | Latin American Studies | Urban Studies and Planning


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