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Paul Krugman wins Nobel Economics Prize

world Updated: Oct 13, 2008 20:13 IST

US economist Paul Krugman, a prolific New York Times columnist and fierce critic of Washington's economic policies, won the Nobel Economics Prize on Monday.

The Princeton University professor was rewarded for his "analysis of trade patterns," the Nobel jury said.

Krugman, 55, has formulated a new theory that determines the effects of free trade and globalisation, as well as the driving forces behind worldwide urbanisation, the citation said.

"I'm a great believer of continuing to do work. I hope it doesn't change things too much," Krugman told Swedish television immediately after the prize announcement.

"Krugman's approach is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale," the jury wrote.

Unlike traditional trade theory, which assumes that differences between countries explains why some nations export agricultural products while others export industrial goods, Krugman's "theory clarifies why worldwide trade is in fact dominated by countries which not only have similar conditions, but also trade in similar products," it added.

Krugman has formalised a new global trade policy which helps to explain that globalisation tends towards concentration, both in terms of what a manufacturing base makes, and where it is located.

His theory shows that globalisation tends to increase the pressures on urban living, sucking people into these centres of concentration.

"Krugman's theories have shown that the outcome of these processes can well be that regions become divided into a high-technology urbanised core and a less developed 'periphery,'" the jury said.