Paul Krugman has won the Nobel economics prize 2008. Credit: Princeton University.

This year’s Nobel prize for economics was awarded to American scholar Paul Krugman. 

The Royal Swedish Academy of Sciences awarded the prize in economic sciences to Mr Krugman for his analysis of trade patterns and economic activity. He will receive $1.4 million (approximately £800,000) as part of the prize.

His research explores the effects and issues of free trade and globalisation, as well as investigating the causes of worldwide urbanisation. His theory has integrated the previously disparate research fields of international trade and economic geography.

The academy was impressed with Mr Krugman’s work, which shows an extensive reorientation of research into the effects of economies of scale on trade patterns and on the location of economic activity.

In its citation for Mr Krugman’s award, the academy said: “Krugman’s approach is based on the premise that many goods and services can be produced more cheaply in a long series, a concept generally known as economies of scale.”

“Meanwhile, consumers demand a varied supply of goods. As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another.”

Mr Krugman is an economics and international affairs lecturer at Princeton University in New Jersey and has written several books on the subject. He is also a popular columnist for the New York Times.