Trade policy and regional inequalties

This article aims to analyze the effects of trade policies on the pattern o f regional inequalities within a country. It is inspired, firstly, by the d ebate concerning the role of protectionist policies in the development of a pattern of striking regional inequalities during the Spanish industrializa tion process and, secondly, by current evidence of an increase in these ine qualities following Spain's entry in the EU, in 1986. We employ an economic geography model comprising three regions: two domestic and one external. L abor mobility is permitted between the domestic regions but not with the ex ternal region. The model shows that trade liberalization increases regional inequalities. JEL classification: F12, F15, R12.