Stockholm, October 13
American economist Paul Krugman won the 2008 Nobel prize for economics for bringing together analysis of trade patterns and where economic activity takes place, a new theory that addresses what drives worldwide urbanisation, the prize committee said today.

The Royal Swedish Academy of Sciences said the prestigious 10 million crown (1.4 million dollars) prize recognised Krugman's formulation of a new theory to answer questions driving worldwide urbanisation.

“He has thereby integrated the previously disparate research fields of international trade and economic geography,” the committee said in its statement.

Krugman is a professor of economics and international affairs at Princeton University in the United States.

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences, in Memory of Alfred Nobel, was established in the 1960s and is not part of the original group of awards set out in Alfred Nobel’s 1895 will.

The US economist said the world economy could suffer a prolonged recession but might escape collapse. ‘’This is terrifying,’’ Paul Krugman, speaking after learning of his award, said of market chaos over recent weeks.

But he added: ‘’I’m slightly less terrified today than I was on Friday.’’ Policymakers around the world agreed on drastic steps over the weekend to rescue banks and free up the flow of lending in the hope of staving off a global recession.

A strong critic of the Bush Administration, Krugman praised the efforts made by world leaders to staunch the crisis.

‘’We’re going to have a recession and perhaps a prolonged one, but perhaps not a collapse,’’ he said.

A prominent economist who writes columns for the New York Times, Krugman has long featured among the favourites to win a Nobel. — Reuters