In contrast, the losses on their housing loans were relatively mild, notwithstanding the fact that the unemployment rate rose to about 11 per cent and mortgage rates reached as high as 17 per cent.   Second, demand for credit from the corporate sector declined as the sector underwent a period of deleveraging.
In economic theory, two strands of thinking have emerged. The first, supported by Paul Krugman (1991) and the new economic geography models, suggests that as trade barriers (e.g. transport and transaction costs) are reduced, opportunities for economies of scale and specialisation in production where countries have a comparative advantage would increase.