Krugman's Core-Periphery Model

Krugman's Core-Periphery Model explains how economic activity and development tend to concentrate in certain regions (“core”) while other areas (“periphery”) remain less developed. In this model, regions trade and interact, but because the core has more industries, innovation, and infrastructure, it attracts more businesses and workers, reinforcing its dominance. Over time, this creates a divide: the core becomes wealthier and more dynamic, while the periphery struggles to catch up. The model highlights how differences in location, connectivity, and economies of scale can lead to persistent regional disparities in development.