The Agglomeration Dilemma: “Should I Stay or Should I Go?”

This paper presents a critical survey of some recent developments in the theory of international trade. Particular emphasis is given to the role of increasing returns to scale and labor mobility in shaping the pattern of industrial location across integrating countries. The goal is to review and discuss the novel insights and predictions of the so‐called “new” theories in order to pose and stimulate avenues for future research.