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The Spatial Economy: Cities, Regions, and International Trade
Abstract
The authors show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urban, regional, and international economics. Since 1990 there has been a renaissance of theoretical and empirical work on the spatial aspects of the economy—that is, where economic activity occurs and why. Using new tools—in particular, modeling techniques developed to analyze industrial organization, international trade, and economic growth—this "new economic geography" has emerged as one of the most exciting areas of contemporary economics. The authors show how seemingly disparate models reflect a few basic themes, and in so doing they develop a common "grammar" for discussing a variety of issues. They show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urban, regional, and international economics. This book is the first to provide a sound and unified explanation of the existence of large economic agglomerations at various spatial scales.
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“Geographic distance (or transportation costs) plays also a central role in the literature on trade and economic geography(Fujita et al. 1999).”
From Economic reforms and industrial policy in a panel of Chinese cities (2016) · cites this paper as Fujita et al. 1999
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15 Years of New Growth Economics: What Have We Learnt?Preprint
Sala-i-Martín, X. (2002) · SSRN Electronic Journal · doi:10.2139/ssrn.320765 · Cited by 165
Quality, Trade and the Moving Window: The Globalisation Process
Sutton, J. D. (2007) · The Economic Journal · doi:10.1111/j.1468-0297.2007.02119.x · Cited by 161
Identifying and Interpreting Regional Convergence Clusters Across Europe
Corrado, L., Martin, R., & Weeks, M. (2005) · The Economic Journal · doi:10.1111/j.0013-0133.2005.00984.x · Cited by 160
“…long-run regional growth patterns that depend, among other things, on the relative importance of transport costs and localisation economies (Fujita et al., 1999; Brackman et al., 2001; Fujita * We are grateful to Vasco Carvalho, Gernot Doppelhofer, Andrew Harvey, Hashem Pesaran, Jonathan…”
InfluentialOn the equilibrium properties of locational sorting models
Bayer, P. J., & Timmins, C. D. (2005) · Journal of Urban Economics · doi:10.1016/j.jue.2004.12.008 · Cited by 162
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Ketels, C. H. M. (2013) · Cambridge Journal of Regions Economy and Society · doi:10.1093/cjres/rst008 · Cited by 159
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Baldwin, R. (2013) · doi:10.30875/3c1b338a-en · Cited by 161
Creative Clusters: Towards the Governance of the Creative Industries Production System?
Pratt, A. C. (2004) · Media International Australia · doi:10.1177/1329878x0411200106 · Cited by 161
A Spatial Econometric Analysis of Convergence Across European Regions, 1980–1995
Gallo, J. L., Ertur, C., & Baumont, C. (2003) · Advances in spatial science · doi:10.1007/978-3-662-07136-6_4 · Cited by 160
Understanding and managing the complexity of urban systems under climate change
Rüth, M., & Coelho, D. L. (2007) · Climate Policy · doi:10.1080/14693062.2007.9685659 · Cited by 160
“…detail or theoretical conceptualizations dealing with both the temporal and spatial dimensions of urban change (e.g. Black and Henderson, 1999; Fujita et al., 1999; Brenner, 2000), the interconnection among the various drivers and repercussions – social, economic and environmental – has…”
BackgroundThe Future of Spatial Analysis in the Social Sciences
Anselin, L. (1999) · Annals of GIS · doi:10.1080/10824009909480516 · Cited by 160
“…described, but several of the theoretical frameworks suggest a notion of space that is endogenously determined and changes as a function of the strength 3 For a recent review, see the collection of papers in Pleskovic (1999), Fujita et al (1999); also Martin (1999) for a more critical assessment.”
BackgroundBobonis, G. J., & Shatz, H. J. (2007) · The Review of Economics and Statistics · doi:10.1162/rest.89.1.30 · Cited by 160
“1 See Norman and Pepall (2002), Fujita, Krugman, and Venables (1999), Head, Ries, and Swenson (1995), and references therein for more on agglomeration economies.”
BackgroundCaragliu, A., & Nijkamp, P. J. (2015) · Journal of Economic Geography · doi:10.1093/jeg/lbv042 · Cited by 160
The Location Behavior of the Multinational Enterprise: Some Analytical Issues
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Central Place Theory and City Size Distribution
Hsu, W. (2012) · The Economic Journal · doi:10.1111/j.1468-0297.2012.02518.x · Cited by 157
“Discussion As in Fujita et al. (1999b) or similar models, I employ immobile farmers as a primitive assumption and the uniform distribution for simplicity.”
InfluentialRebalancing the Spatial Economy: The Challenge for Regional Theory
Martin, R. (2015) · Territory Politics Governance · doi:10.1080/21622671.2015.1064825 · Cited by 157
“(FUJITA et al., 1999, p. 345) Whilst, as I have argued above, it is working this tension far too hard to expect it to provide a full, historically informed and contextualized explanation of uneven regional development, the lack of any integrative framework or principles in regional studies is just…”
BackgroundTransport Infrastructure, Spatial Clusters and Regional Economic Growth in China
Yu, N., de Jong, M., Storm, S., et al. (2011) · Transport Reviews · doi:10.1080/01441647.2011.603104 · Cited by 155
“Macroeconomics can help explain whether and to what degree transport infrastructure can lower production costs and increase the level of economic output (Samuelson, 1954; Krugman, 1991, 1995; Fujita et al., 1999; Lafourcade, 2009).”
BackgroundRandolph, G. F., & Storper, M. (2022) · Urban Studies · doi:10.1177/00420980211067926 · Cited by 162
“As inter-urban transport costs decline, specialisation can also take the form of an increasingly complex division of labour not only within but across cities (Henderson, 2005), a relationship formalised by the New Economic Geography (Fujita et al., 1999; Krugman, 1991).”
BackgroundKotavaara, O., Antikainen, H., & Rusanen, J. (2011) · Journal of Transport Geography · doi:10.1016/j.jtrangeo.2010.10.013 · Cited by 154
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Brakman, S., Garretsen, H., & Schramm, M. (2004) · Journal of Regional Science · doi:10.1111/j.0022-4146.2004.00344.x · Cited by 153
“BlackwellPublishing, Inc., 350MainStreet,Malden,MA02148,USAand9600GarsingtonRoad,Oxford,OX42DQ,UK. space.1 The seminal book by Fujita, Krugman, and Venables (1999) develops and summarizes the main elements of the new economic geography approach.”
BackgroundIndustrial Location and Spatial Inequality: Theory and Evidence from India
Lall, S. V., & Chakravorty, S. (2005) · Review of Development Economics · doi:10.1111/j.1467-9361.2005.00263.x · Cited by 153
“Krugman (1991) and Fujita et al. (1999) have analytically modeled increasing returns, which stem from technological and pecuniary externalities.”
How congestion shapes cities: from mobility patterns to scaling.
Louf, R., & Barthelemy, M. (2014) · UCL Discovery (University College London) · Cited by 152
Raballand, G. (2003) · Comparative Economic Studies · doi:10.1057/palgrave.ces.8100031 · Cited by 153
Urbanisation and City Size Distribution in China
Song, S., & Zhang, K. H. (2002) · Urban Studies · doi:10.1080/0042098022000033890 · Cited by 153
Space in the Study of Labor Markets
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Leßmann, C. (2009) · Environment and Planning A Economy and Space · doi:10.1068/a41296 · Cited by 153
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Behrens, K., Ottaviano, G. I. P., Lamorgese, A. R., & Tabuchi, T. (2007) · SSRN Electronic Journal · doi:10.2139/ssrn.988322 · Cited by 152
“Hence diag(Φ−11)−1θ = diag(Φλ∗)1 = Φλ∗, 5This differs from the typical models of the ‘new economic geography’ in which multiple equilibria may arise due to the non-linearity of the underlying equilibrium conditions (see, e.g., Fujita et al., 1999).”
BackgroundInfluentialTwenty years of accessibility improvements. The case of the Spanish motorway building programme
Holl, A. (2006) · Journal of Transport Geography · doi:10.1016/j.jtrangeo.2006.09.003 · Cited by 152
“Recently, Fujita et al. (1999) show how market potential can be given a formal spatial modelling interpretation.”
Inequality, credit and financial crises
Perugini, C., Hölscher, J., & Collie, S. (2015) · Cambridge Journal of Economics · doi:10.1093/cje/beu075 · Cited by 146
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Structural gravity equations with intensive and extensive margins
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Zhai, F. (2008) · Journal of Economic Integration · doi:10.11130/jei.2008.23.3.575 · Cited by 148
“See Fujita et al. (1999).”
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“Reassuringly, the theoretical consideration of two manufacturing industries (Krugman and Venables, 1996) or a continuum of industries (Fujita et al., 1998), does not affect the fundamental results found in two-sector settings.”
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SCHIFF, N. M. (2014) · Journal of Economic Geography · doi:10.1093/jeg/lbu040 · Cited by 148
“…labels or identities of the products.2 While a symmetric view of variety has been quite useful in tackling many economic problems, such as in the new economic geography (Fujita et al., 1999), in the consumer cities literature variety is often described as the availability of product subcategories.”
BackgroundSpatial distribution of organic farming in Germany: does neighbourhood matter?
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Bathelt, H. (2006) · Progress in Human Geography · doi:10.1191/0309132506ph603pr · Cited by 143
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Survival of the Fittest in Cities: Urbanisation and Inequality
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“The analysis of asymmetric urban systems when cities interact through trade is quite involved (Fujita, Krugman, and Venables, 1999 ; Tabuchi, Thisse, and Zeng, 2005 ).”
Countries, regions and trade: On the welfare impacts of economic integration
Behrens, K., Gaigné, C., Ottaviano, G. I. P., & Thisse, J. (2006) · European Economic Review · doi:10.1016/j.euroecorev.2006.08.005 · Cited by 145
“As in most new trade and economic geography models, all shipments of the homogeneous good are assumed to be costless (Krugman, 1991; Fujita et al., 1999).”
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Rossi‐Hansberg, E. (2003) · Review of Economic Dynamics · doi:10.1016/s1094-2025(03)00056-5 · Cited by 145
Changes in the spatial concentration of employment across US counties: a sectoral analysis 1972–2000
Desmet, K., & Fafchamps, M. (2005) · Journal of Economic Geography · doi:10.1093/jnlecg/lbh046 · Cited by 144
“Further clustering arises when spatial externalities areintroduced (Marshall, 1890; Mills, 1967; Henderson, 1974; Rodríguez Clare, 1996; Fafchamps, 1997; Fujita et al., 1999).”
BackgroundUrban growth drivers in a Europe of sticky people and implicit boundaries
Cheshire, P., & Magrini, S. (2008) · Journal of Economic Geography · doi:10.1093/jeg/lbn044 · Cited by 144
Clusters, Convergence, and Economic PerformancePreprint
Delgado, M., Porter, M. E., & Stern, S. (2010) · SSRN Electronic Journal · doi:10.2139/ssrn.1695011 · Cited by 143
Agglomeration and productivity: evidence from firm-level data
Andersson, M., & Lööf, H. (2009) · The Annals of Regional Science · doi:10.1007/s00168-009-0352-1 · Cited by 151
Central place theory and its reemergence in regional science
Mulligan, G. F., Partridge, M. D., & Carruthers, J. I. (2012) · The Annals of Regional Science · doi:10.1007/s00168-011-0496-7 · Cited by 142
“Trying to overcome some of criticisms of CPT, Fujita et al. (1999) adopt an NEG model to show how a CPT hierarchy can arise during initial territorial settlement— though one weakness of their model is that it does not lead to the spatial layering of services that defines CPT. Tabuchi and Thisse (2011) add further rich…”
BackgroundMethodInfluentialRethinking (New) Economic Geography Models: Taking Geography and History More Seriously
Garretsen, H., & Martin, R. (2010) · Spatial Economic Analysis · doi:10.1080/17421771003730729 · Cited by 140
“(Fujita et al., 1999, p. 23) But, as the above quote itself suggests, this appeal to ‘history’ appears to be more a methodological device for ‘narrowing down’ the solution space of the models*for limiting the range of possible multiple equilibrium outcomes*than a genuine attempt to explain how the…”
BackgroundThe city size distribution debate: Resolution for US urban regions and megalopolitan areas
Berry, B. J. L., & Okulicz‐Kozaryn, A. (2011) · Cities · doi:10.1016/j.cities.2011.11.007 · Cited by 142
Settlement Scaling Theory: Bridging the Study of Ancient and Contemporary Urban Systems
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“Although novel in its scope, it builds on the long history of quantitative models in urban economics, economic geography, complex systems and regional science that traces the origin and persistence of population agglomeration to the advantages of concentrating human populations in space after accounting for associated…”
BackgroundAgglomeration and Economic Development: Import Substitution vs. Trade Liberalisation
Puga, D., & Venables, A. J. (1999) · The Economic Journal · doi:10.1111/1468-0297.00433 · Cited by 142
Self-citationAbility sorting and consumer city
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Zoom in, zoom out: Geographic scale and multinational activity
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Frățilă, A., Gavril, I. A., Niţă, S. C., et al. (2021) · Sustainability · doi:10.3390/su13147961 · Cited by 140
“The benefits of seaports analysed in the literature include [18] reducing transport costs [19,20], increasing private investment, encouraging trade [21], fostering employment [22,23], improving logistics [24], and other port-related activities [23,25].”
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The heavy plow and the agricultural revolution in Medieval Europe
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Entrepreneurship Capital and Economic Performance
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Viewpoint: From cities to productivity and growth in developing countries
Duranton, G. (2008) · Canadian Journal of Economics/Revue canadienne d économique · doi:10.1111/j.1540-5982.2008.00482.x · Cited by 137
“…prediction of modern regional economics is that lower levels of transport costs can lead first to increased regional agglomeration, and then possibly to decreased regional agglomeration for even lower levels of transport costs (Fujita, Krugman, and Venables 1999; Combes, Mayer, and Thisse 2008).”
Export behaviour of SMEs in transition countries
Gashi, P., Hashi, I., & Pugh, G. (2013) · Small Business Economics · doi:10.1007/s11187-013-9487-7 · Cited by 138
“We start from the view that localisation and urbanisation economies generated by the concentration of firms in cities play an important role in the overall performance of firms, including their export activities (Audretsch and Stephan 1999; Fujita and Thisse 2002; Fujita et al. 1999; etc.).”
BackgroundMeasuring the determinants of relative economic performance of rural areas
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“Of course, the idea of spatial clustering is not new, its antecedents based in agglomeration economics (e.g. Fujita et al., 1999; Krugman, 1991).”
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Basile, R. (2003) · Regional Science and Urban Economics · doi:10.1016/s0166-0462(02)00073-x · Cited by 137
\nLooking for multiple equilibria when geography matters : German city growth and the WWII shock
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Polycentric Urban Development: The Case of Hangzhou
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“…to describe the evolution of polycentric structure as a result of centripetal and centrifugal forces of economic relationships between firms (Fujita et al, 1999; Krugman, 1996), and Anas and Kim (1996) built a computable general equilibrium model to explain the emergence of urban subcenters…”
BackgroundIntroduction: Clusters in Urban and Regional Development
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“For all weight matrices described above, two spatial regimes, representative of the well-known core-periphery framework (Krugman 1991a, 1991b; Fujita, Krugman, and Venables, 1999), are persistent over the period and for various weight matrices, which highlights some form of spatial…”
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“This has been developed more formally by Fujita et al (1999) and others, and a useful application to appraisal in the transport case is given by Venables (2007).”
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“A firm’s gain from relocation is still given by (9), so that [ dRH dnH ]”
BackgroundMapping Process to Pattern in the Landscape Change of the Amazonian Frontier
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“The ‘‘new economic geography’’ calls for the use of ‘‘computer-assisted thinking’’ and numerical techniques as supplements to analytical results (Fujita, Krugman, and Venables 1999, 8).”
BackgroundMethodRosés, J. R. (2003) · The Journal of Economic History · doi:10.1017/s0022050703002511 · Cited by 130
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Re new ing the Geography of Regions
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“These shortcomings are perhaps most strikingly evident in the disciplinary imperialism betrayed by influential economists such as Paul Krugman when proclaiming a `new economic geography' for analysing the spatial economy (Fujita et al, 1999).”
BackgroundYeung, H. W., Liu, W., & Dicken, P. (2006) · World Development · doi:10.1016/j.worlddev.2005.07.019 · Cited by 129
“This approach to cluster development is most commonly found in neoclassical industrial and urban economics (e.g. Fujita and Thisse, 1996; Ellison and Glaeser, 1999; Fujita et al., 1999).”
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“…the result of a historical process that can be largely explained by the close proximity of market activities, which allows economic agents to benefit from economies of scale, minimal transaction and mobility costs, communication networks, and technology and information sharing (Fujita et al. 1999).”
Agglomeration and Economic Geography
Ottaviano, G. I. P., & Thisse, J. (2003) · Cited by 128
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Geography and International Inequalities: The Impact of New Technologies*
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Self-citationLearning-by-Exporting: What We Know and What We Would Like to Know
Silva, A., Afonso, Ó., & Africano, A. P. (2012) · The International Trade Journal · doi:10.1080/08853908.2012.682022 · Cited by 126
An Economic Theory of Regional Clusters
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“[3] in economic geography models.”
Why does entry cluster geographically? Evidence from the US tire industry
Buenstorf, G., & Klepper, S. (2010) · Journal of Urban Economics · doi:10.1016/j.jue.2010.03.005 · Cited by 124
What Causes Spatial Variations in Economic Development in the United States?
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Zénou, Y. (2001) · Cambridge University Press eBooks · doi:10.1017/cbo9780511626944 · Cited by 119
Metadata
- Authors
- Fujita, M., Krugman, P., & Venables, A. J.
- Venue
- The MIT Press eBooks
- Publisher
- The MIT Press
- Published
- 1999-06-11
- OpenAlex
- W2889260602
- Cited by
- 4,788
- References
- 0
- Citations by year
- 2026: 149 · 2025: 132 · 2024: 112 · 2023: 121 · 2022: 126 · 2021: 156 · 2020: 142 · 2019: 163 · 2018: 179 · 2017: 165 · 2016: 115 · 2015: 171 · 2014: 186 · 2013: 211 · 2012: 245
- FWCI
- 173.24
- Type
- book
- Language
- en
- Open access
- closed
- Locations
- The MIT Press eBooks (publishedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Agglomeration and Urban Systems
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Regional Economic Trends and Sectoral Structure
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Keywords
- new economic geography, increasing returns, transportation costs, factor mobility, agglomeration economies, urban economics, regional economics, international trade, industrial organization, economic growth, spatial economics
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Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
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