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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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Robert-Nicoud, F. L. (2004) · Journal of Economic Geography · doi:10.1093/jnlecg/lbh037 · Cited by 123
Jensen, J., Rutherford, T. F., & Tarr, D. G. (2007) · Review of Development Economics · doi:10.1111/j.1467-9361.2007.00362.x · Cited by 121
Gräbner, C., Heimberger, P., Kapeller, J., & Schütz, B. (2019) · Cambridge Journal of Economics · doi:10.1093/cje/bez059 · Cited by 120
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“concentration of private sector firms in the main metropolitan areas of Java.(16) In the Philippines, trade liberalisation appears to have benefited primarily the Manila area (Pernia and Quising 2003). There is one exception to this general result. Sanguinetti and Volpe Martincus (2009) observe that employment in Arge…”
BackgroundInfluentialTrade, Human Capital and Innovation: The Engines of European Regional Growth in the 1990s
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“The firms, in turn, benefit from low transportation and transactions costs, as well as economies of scale, and thus gain a competitive advantage (Scott 1988; Krugman 1991, 2000; Fujita, Krugman, and Venables 1999).”
BackgroundInstitutions and FDI location choice: The role of cultural distances
Du, J., Lu, Y., & Tao, Z. (2011) · Journal of Asian Economics · doi:10.1016/j.asieco.2010.11.008 · Cited by 121
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“This negative correlation is also consistent with many theoretical results in the new economic geography literature (Fujita, Krugman, and Venables, 1999) where market access is typically a bell-shaped function of distance to the main population center.”
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“That leaves us with the ‘new economic geography’ proper, which is most closely associated with Paul Krugman at MIT (see Krugman, 1991; 1996; Fujita et al., 1999).”
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Engel, J. S., & Aguirre, I. D. P. (2009) · Business Horizons · doi:10.1016/j.bushor.2009.06.001 · Cited by 125
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“As in Krugman (1991), Fujita et al. (1999) and Ottaviano et al.”
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Easterly, W. (2004) · SSRN Electronic Journal · doi:10.2139/ssrn.507402 · Cited by 125
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“…in defined geographic areas has, of course, been a longstanding focus of economic geographers (Marshall 1920; Scott 1988; Dicken and Thrift 1992; Storper 1995, 1997) and, more recently, geographic economists (Fujita, Krugman, and Venables 1999; see Martin 1999 for a critical discussion).”
BackgroundThe Regional Economy, Spatial Structure and Regional Urban Systems
Parr, J. B. (2013) · Regional Studies · doi:10.1080/00343404.2013.799759 · Cited by 116
“Further progress can be expected, and the continued development of the ‘New Economic Geography’ (NEG), stimulated by the work of KRUGMAN (1995, 2009) and FUJITA et al. (1999), is of potential importance in this connection.”
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Head, K. C., Mayer, T., & Ries, J. (2002) · Economica · doi:10.1111/1468-0335.00289 · Cited by 116
Li, Y. (2012) · Regional Environmental Change · doi:10.1007/s10113-012-0295-4 · Cited by 115
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BackgroundTime to ACT: Realizing Indonesia's Urban Potential
Roberts, M., Sander, F. G., & Tiwari, S. (2019) · World Bank, Washington, DC eBooks · doi:10.1596/978-1-4648-1389-4 · Cited by 114
Mariotti, I., Akhavan, M., & Rossi, F. (2021) · European Planning Studies · doi:10.1080/09654313.2021.1895080 · Cited by 117
“…market size and market potential, labour costs and skills, and transportation costs (Lloyd and Dicken 1992; Hayter 1997; Krugman 1995; Fujita, Krugman, and Venables 1999; Van Dijk and Pellenbarg 2000; Brouwer, Mariotti, and van Ommeren 2004; Arauzo-Carod, Liviano-Solis, and…”
BackgroundEU enlargement and the internal geography of countries
Crozet, M., & Soubeyran, P. K. (2004) · Journal of Comparative Economics · doi:10.1016/j.jce.2004.02.009 · Cited by 114
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Self-citationREGIONAL SPECIALIZATION, URBAN HIERARCHY, AND COMMUTING COSTS*
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“Finally, all spatial-sectoral equilibria are steady-states of (10).”
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“As Fujita, Krugman, and Venables (1999) reminded us, thinking about externalities in urban and regional development continues to be heavily influenced by the work of Alfred Marshall (1920).”
BackgroundInfluentialAn agent-based approach to model future residential pressure on a regional landscape
Fontaine, C., & Rounsevell, M. (2009) · Landscape Ecology · doi:10.1007/s10980-009-9378-0 · Cited by 112
“Although people are central to traditional theories of urban economics, their diversity and behaviour are not acknowledged and physical determinism remains important in most urban studies (Fujita et al. 1999; Torrens 2001; Fujita and Thisse 2002; Barredo et al. 2003; Batty 2005).”
BackgroundGeographical disadvantage: a Heckscher–Ohlin–von Thünen model of international specialisation
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“The question whether the re-organisation of the internal geography is likely to attract economic activities towards border regions is not formally addressed by Elizondo/Krugman (1996) and Fujita et al. (1999). They assume identical external trade costs for all locations within a country such that no region has a cost…”
InfluentialThe role of the service sector in the process of industrialization
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“The indirect effects of a change in one activity, triggered by climate change or any other similar factor, are higher in small local communities with one dominating sector than in larger communities with a diversified economy (Fujita et al. 1999).”
BackgroundLoggers and Forest Fragmentation: Behavioral Models of Road Building in the Amazon Basin
Arima, E. Y., Walker, R. T., Perz, S. G., & Caldas, M. M. (2005) · Annals of the Association of American Geographers · doi:10.1111/j.1467-8306.2005.00473.x · Cited by 112
Eraydın, A., & Köroğlu, B. A. (2005) · Entrepreneurship and Regional Development · doi:10.1080/08985620500202632 · Cited by 111
“This interest reflects itself in both formal models of industrial concentration described by Krugman (1991a, b), Fujita and Thisse (1996), and Fujita et al. (1999) and also in the new industrial geography literature, which created a wide collection of descriptive studies.”
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Self-citationUrban competitiveness in the knowledge economy: Universities as new planning animateurs
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“Each of them is coupled with the country characteristic of market potential variable to form three interaction variables that represent the new economic geography concerns of the model, namely the pull of centrality.”
BackgroundA class of spatial econometric methods in the empirical analysis of clusters of firms in the space
Arbia, G., Espa, G., & Quah, D. T. (2007) · Empirical Economics · doi:10.1007/s00181-007-0154-1 · Cited by 108
“After the recent reinterpretation of Marshall's (Marshall, 1890) insights on 19th–century industrial clustering in space due mainly to Krugman (1991) and Fujita et al. (1999), the empirical analysis on this subject has developed along two distinct lines of research.”
BackgroundIntegration, agglomeration and welfare
Pflüger, M., & Südekum, J. (2007) · Journal of Urban Economics · doi:10.1016/j.jue.2007.03.006 · Cited by 108
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BackgroundA simple model of economic geography à la Helpman–Tabuchi
Murata, Y., & Thisse, J. (2005) · Journal of Urban Economics · doi:10.1016/j.jue.2005.03.004 · Cited by 105
“[6], the sustain point does not coincide with the break point in our model.”
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Weisbrod, G. (2008) · The Annals of Regional Science · doi:10.1007/s00168-007-0184-9 · Cited by 104
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Automatic filters for the detection of coherent structure in spatiotemporal systems
Shalizi, C. R., Haslinger, R., Rouquier, J., Klinkner, K. L., & Moore, C. (2006) · Physical Review E · doi:10.1103/physreve.73.036104 · Cited by 98
“One might therefore hope for an automatic filter capable of not only distinguishing particles, domains, and extended objects like strings and domain walls in large spatiotemporal systems, but also inferring their degree of autonomy.”
BackgroundPutting new economic geography to the test: Free-ness of trade and agglomeration in the EU regions
Brakman, S., Garretsen, H., & Schramm, M. (2006) · Regional Science and Urban Economics · doi:10.1016/j.regsciurbeco.2006.06.004 · Cited by 100
Product diversity, taste heterogeneity, and geographic distribution of economic activities:
Murata, Y. (2003) · Journal of Urban Economics · doi:10.1016/s0094-1190(02)00507-7 · Cited by 100
Maseland, R., & Vaal, A. D. (2002) · De Economist · doi:10.1023/a:1016161727537 · Cited by 99
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Baldwin, R., Ottaviano, G. I. P., & Martin, P. J. (1998) · SSRN Electronic Journal · doi:10.2139/ssrn.92169 · Cited by 97
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Xue-liang, Z. (2013) · 中国社会科学：英文版 · doi:10.1080/02529203.2013.787222 · Cited by 98
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“…with regional industrial specialization and concentration and the urbanization economies from agglomeration of firms from different industries that underpin the growth of urban locations (Krugman, 1990, 1991, 1993; Fujita et al., 1999; Duranton & Puga, 2004; Kitson et al., 2004; World Bank, 2009).”
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Garretsen, H., & Peeters, J. (2009) · Review of World Economics · doi:10.1007/s10290-009-0018-1 · Cited by 98
“From the new economic geography literature (Fujita, Krugman, and Venables, 1999), we know that if agglomeration effects matter one cannot assume the spatial distribution of other firms to be taken as given.”
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“The emergence of a new economic geography is indeed one of the major events in the economic literature of the last decade [see Krugman (1991, 1993), Fujita et al. (1999), Fujita and Thisse (2002)].”
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“…the New Economic Geography tradition predict that our measure of trade openness (trade as a percentage of GDP) should have a negative effect on spatial concentration and hence on the Zipf coefficient because international trade weakens agglomeration forces (See Chapter 18 of Fujita et al., 1999).”
Income Inequality within European Regions: Determinants and Effects on Growth
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“Although this distributive characterization may change in more advanced models (Fujita et al., 1999), for example with the introduction of rents, these considerations also suggest that factor mobility increases income inequality in richer regions and reduces it in poorer ones.”
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Social Behaviour as a Basis for Modelling the Urban Housing Market: A Review
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Markusen, J. R., Rutherford, T. F., & Tarr, D. G. (2000) · World Bank, Washington, DC eBooks · doi:10.1596/1813-9450-2413 · Cited by 97
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Bakker, G. (2005) · The Economic History Review · doi:10.1111/j.1468-0289.2005.00306.x · Cited by 96
What determines the location choice of R&D activities by multinational firms?
Siedschlag, I., Smith, D., Turcu, C., et al. (2013) · Research Policy · doi:10.1016/j.respol.2013.06.003 · Cited by 96
“3 For reviews of this literature see Fujita et al. (1999) and Markusen (2002). activities of multinationals.”
BackgroundFirm Size and Geographical Aggregation: An Empirical Appraisal in Industrial Location
Arauzo‐Carod, J., & Manjón-Antolín, M. C. (2004) · Small Business Economics · doi:10.1023/b:sbej.0000022216.09083.76 · Cited by 96
Concentration, agglomeration and the size of plants
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The impact of investments in special economic zones on regional development: the case of Poland
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Gao, D., Li, Y., & Li, G. (2022) · Environmental Science and Pollution Research · doi:10.1007/s11356-022-19553-9 · Cited by 94
Hervás-Oliver, J.-L., González‐Alcaide, G., Meri, P. C., & Sempere-Ripoll, F. (2015) · European Planning Studies · doi:10.1080/09654313.2015.1021300 · Cited by 95
“…N times cited Krugman P, 1991b, V99, P483, J Polit Econ 460 Krugman P., 1991b, Geography Trade 349 Glaeser EL, 1992, V100, P1126, J Polit Econ 282 Fujita et al., 1999, Spatial Ec Cities Re 274 Porter M. E., 1990, Competitive Advantag 273 Jaffe AB, 1993, V108, P577, Q J Econ 231 Jacobs J.,…”
BackgroundAdding geography to the new economic geography: bridging the gap between theory and empirics
Bosker, M., Brakman, S., Garretsen, H., et al. (2010) · Journal of Economic Geography · doi:10.1093/jeg/lbq003 · Cited by 94
“…6) or Krugman (1993) both considering a ‘circle’ or ‘racetrack’ economy; Puga (1999) or Tabuchi et al. (2005) both considering an ‘equidistant’ economy; Fujita et al. (1999b) or Krugman (1993) both considering a ‘line’ economy; and Krugman and Elizondo (1996) or Monfort and Nicolini (2000)…”
BackgroundMethodKe, S., & Feser, E. (2010) · Regional Studies · doi:10.1080/00343400903373601 · Cited by 93
“The specific locational characteristics – such as accessibility, urban and regional infrastructure, human capital, and external economies – are drawn from previous research (for example, HENDERSON, 1986; GLAESER et al., 1992; FUJITA et al., 1999; and DEMURGER, 2001).”
BackgroundCities and Specialisation: Evidence from South Asia
Marcel Fafchamps, A., & Shilpi, F. J. (2005) · The Economic Journal · doi:10.1111/j.1468-0297.2005.00997.x · Cited by 91
The Location of the UK Cotton Textiles Industry in 1838: A Quantitative Analysis
Crafts, N. F. R., & Wolf, N. (2014) · The Journal of Economic History · doi:10.1017/s0022050714000874 · Cited by 93
How Migration Restrictions Limit Agglomeration and Productivity in China
Au, C.-C., & Henderson, V. (2002) · National Bureau of Economic Research · doi:10.3386/w8707 · Cited by 93
Economic capability of East German regions: Results of a cluster analysis
Kronthaler, F. (2005) · Regional Studies · doi:10.1080/00343400500213630 · Cited by 89
Internationalization and Innovation as Resources for SME Growth in Foreign Markets
Zucchella, A., & Siano, A. (2014) · International Studies of Management and Organization · doi:10.2753/imo0020-8825440102 · Cited by 91
Do city–county mergers in China promote local economic development?
Wei, T. Y., & Hewings, G. J. D. (2017) · Economics of Transition · doi:10.1111/ecot.12118 · Cited by 92
Making sense of the manufacturing belt: determinants of U.S. industrial location, 1880–1920
Klein, A., & Crafts, N. F. R. (2011) · Journal of Economic Geography · doi:10.1093/jeg/lbr023 · Cited by 87
Increasing returns: evidence from local wage rates in Great Britain
Fingleton, B. (2003) · Oxford Economic Papers · doi:10.1093/oep/55.4.716 · Cited by 91
“In recent decades the urban and geographical economics literature (Fujita and Thisse, 2000; Huriot and Thisse, 2000; Fujita et al., 1999; Brakman et al., 2001; Abdel-Rahman and Fujita, 1990; Rivera-Batiz, 1988; Ottaviano and Thisse, 2001) has proposed interrelated theories invariably linked to the…”
BackgroundAgglomeration and welfare: The core–periphery model in the light of Bentham, Kaldor, and Rawls
Charlot, S., Gaigné, C., Robert-Nicoud, F. L., et al. (2005) · Journal of Public Economics · doi:10.1016/j.jpubeco.2004.12.002 · Cited by 91
“Using (3), (2) and (6), we find that the typical firm established in region r breaks even if”
Self-Organization of Surface Transportation Networks
Levinson, D. M., & Yerra, B. (2006) · Transportation Science · doi:10.1287/trsc.1050.0132 · Cited by 91
“” Recently, Fujita et al. (1999) formulated a mathematical model that explains the hierarchical formation of cities from a “decentralized market process”. This research Levinson, David and Bhanu Yerra (2006) Self Organization of Surface Transportation Networks Transportation Science 40(2) 179-188”
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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