In this paper, we have developed a model that sets out to explain the existence of megacities in developing countries, in the context of a Krugman-type core-periphery model. The paper also suggests that agglomeration can be fostered by manufacturers mainly serving the domestic market. However, the analysis goes further by emphasising that megacities are not only the result of protective trade policies, but also the consequence of the relative position of a country, in terms of industrialisation, with respect to the rest of the world.
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