1236 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 22
4. Important simplifications can be obtained by a type of
approximation well known from the theory of international
trade: the assumption that for some sectors transportation costs
can be neglected within a certain area and considered prohibi-
tive outside such an area. This is what the theory of interna-
tional trade does with regard to the factors of production. We
propose to do this for some products. In this train of thought
we will speak of a regional sector whenever its product cannot
be transported from one region to another. We think building,
‘he operation of buildings, retail trade and some more services
‘education, for instance) are good examples. We may occa-
sionally lump these sectors together or only distinguish two
of them, a labour-intensive and a capital-intensive one. The
consequence of our assumption is that any increase in the pro-
duction of other sectors in a given region will imply an increase
un production in the regional sectors in the same region.
5. A similar assumption will be made with regard to some
other sectors, to be called national sectors. Their products
cannot be moved between nations, that is, cannot be imported
or exported. Examples are government services, energy and
inland transportation, the latter by definition. As a first ap-
proximation often building materials production may be added.
Energy will not be an example wherever interconnected electri-
city networks exist, as in Europe.
For several of the regional and national sectors we may
neglect transportation costs if no transportation actually
takes place; for some others it will be very essential to take
into account transportation costs. This applies to building ma-
terials and probably to some agricultural and mining products.
6. The remaining sectors will be called international sec-
tors. All commodities appearing in the balance of payments
are necessarily of this category; the inverse is not true, na-
mely, that they must appear in the balance of payments. It is
181 Tinbergen - pag. .
