The Spatial Economy: Cities, Regions, and International Trade

“The ‘new economic geography’, for instance, highlights that geography plays an important role in explaining economic outcomes (Fujita et al. 1999; Fujita and Krugman 2004), whereas a recent strand of the literature emphasizes that culture may affect economic outcomes in various ways (Guiso et al.…”

“9As stressed by Fujita et al. (1999), the tension between the external economies from spatial concentration and the diseconomies associated with large cities, such as commuting costs, was at the heart of the early models for the analysis of the size distribution of urban areas (e.g. size of the…”

“Interregional trade and migration linkages and dynamic agglomeration effects are formed with an empirical general equilibrium model in the tradition of the new economic geography (Krugman 1991; Fujita, Krugman, and Venables 1999).”

“Evidently, under the assumption of factor-price equalization as in Helpman and Krugman (1985), the centrifugal force disappears, and the redispersion is not observed (Krugman and Venables 1990, Section 4; Fujita et al. 1999, Section 14.2).”

“Yet, such analyses are restrained to maritime networks, transport corridors, and port areas, while the role of the urban space, or urban fabric, is either considered secondary or taken for granted by most economic and transportation geographers (Fujita et al., 1999).”

“This reasoning implies that trade is likely to be a fundamental driver of territorial inequality, although, in the long-run, it may also be the trigger of a reduction of inequalities (Fujita et al., 1999, 259).”

“…development process (i.e. spatial heterogeneity) is so striking that the idea of convergence clubs has attracted much attention (see Krugman, 1991; Fujita et al., 1999 for a theoretical approach and Neven & Gouyette, 1995; Le Gallo et al., 2003; Canova, 2004; Corrado et al., 2005; Dall’erba, 2005…”

“Recent research in economic geography has drawn attention to the potential for positive externalities arising from agglomeration of economic activity (FUJITA et al., 1999; OTTAVIANO and PUGA, 1997).”

“Further, substituting (14), (15) and (20) into (11), and recalling that only the intraregional quantities qrr are non-zero, yields, after some longer rear-”

“1See, for example, Krugman (1991a), Krugman (1991b), Fujita and Krugman (1995), and Fujita, Krugman, and Venables (1999).”

“Combining the work on endogenous growth (Romer, 1990; Grossman & Helpman, 1995) and on economic geography (Fujita et al., 1999) enables us to understand this unequal distribution of innovation and the resulting growth dynamics.”

“…because if it had it would lead to a process of cumulative causation of increasing productivity, which is something found in new spatial economics theory as regards the levels of economic activity but not with regard to relative wages of productivites (KRUGMAN, 1991; FUJITA et al., 1999).”

“For any equilibrium distribution λ∗(xj) satisfying conditions (11), this expression has the following symmetry property: ∂V (x0)/∂λ ∗(xi) = ∂V (xk)/∂λ∗(xi+k) for all k ∈ N .”

“And the last but not least some earlier works from Fujita et al. (1999) and Krugman (1991) are recognized as classic works in the economic geography.”

“A third incentive arises from the supply of intermediate goods (see Fujita et al., 1999 for a general overview). Second, most countries have tried to attract FDI via favorable economic policies, which are called institution effects. They include various institutional reforms, the establishment of special economic zone…”

“From a somewhat different angle, Fujita et al. (1999) also stress the importance to innovation of a heterogeneous labour force in terms of skills and backgrounds that brings diversity and suggests that unless a city and its economy are constantly supplied with such people convergence in knowledge…”

“To sum up: high trade costs yields dispersion, whereas low trade costs leads to agglomeration, as in Krugman (1991) and Fujita, Krugman, and Venables (1999).”

“The importance of location and industrial concentration has been of interest to theorists of what is called the new trade theory and the new economic geography (Fujita et al., 1997) but these effects have not been tested empirically when the size of firms varies.”

“The interaction of positive and negative externalities creates intricate geographical patterns of city clusters and rural hinterland (Henderson, 1988; Fujita et al., 1999).”

“In economic geography, this is characterised as the tension between centripetal forces, that concentrate economic activity, and centrifugal forces, that oppose such concentration (Fujita et al., 1999).”

“Besides factor endowment differences and the proximity to large markets, agglomeration economies derived from New Economic Geography (NEG) models encourage firms to concentrate in industrial districts even when they operate in the same sector where they expose themselves to local competition (Fujita et al., 2000).”

“The work represented by this new school of economics is called the New Economic Geography (NEG).2 Fujita et al. (1999) for a comprehensive manifestation of this approach.”

“Clusters give competitive advantages to co-located firms due to the external economies of scale (Fujita et al ., 2000), eased access to resources and proximity to specialized suppliers and customers (Porter, 1998).”

“…works by Hotelling (1929) on competition; Palander (1935) on location theory; Von Thünen (1826) on land use; Weber (1929) on industrial location; contemporary works by Chandler et al. (1998) on industrial dynamics; Fujita et al. (1999) on spatial economy; Porter (1990) on industrial location.”

“Fujita, Krugman, and Venables (1999) also suggest that trade integration might reduce regional inequalities in the long run by attracting manufacturing to the less developed regions of a country especially when wages are lower in these remote regions, because of the relative lack of labour mobility…”

“x3 ¡ x2 = ̧B " ° + 2 ̧B(1¡ 3⁄4) # : (8)”

“See Ottaviano and Puga (1998) for a survey of NEG literature and Fujita et al. (1999), Neary (2001), Ottaviano and Thisse (2001 and 2003) or Baldwin et al. (2003) for more details.”

“Fujita et al. (1999) and Iammarino and McCann (2006) showed that industrial cluster promotes industrial upgrading because of trade and knowledge spillovers.”

“This approach is associated with the work of Paul Krugman (1998) (see also Fujita, Krugman, and Venables 1999; for a critical review, see Martin 1999).”

“The new economic geography (Krugman, 1991; Fujita et al, 1999; Fujita and Thisse, 2002) attempts to explain the persistence of differences in regional economic circumstances over time.”

“…relevant factors conducive for the concentration of population and economic activities in large urban agglomerations (UAs), the linkages between UAs and economic growth were examined in the new economic geography (NEG) framework pioneered by Krugman (1991) and Fujita, Krugman, and Venables (1999).”

“See also Krugman (1991b) and Matsuyama (1991).”

“The only branch of macroeconomic theories that deals with spatiality, to some extent, is that of new economic geography (Krugman 1991; Fujita, Krugman, and Venables 1999), which forms a network of linked regions; however, these models do not include long-run growth mechanisms – a shortcoming…”

“While this issue is of chief concern to port specialists, it also corresponds to a wider concern about the economic advantages or disadvantages of spatial concentration in a global environment (FUJITA et al., 1999; KAPLINSKY, 2004).”

“Horstmann and Markusen (1992) and Brainard (1993).”

“See, for example, FUJITA et al., 1999.”

“Manufacturing and service industries tend to concentrate in geographical areas, driven by common needs for inputs and access to markets, knowledge flows, and the need for specialized skills (Fujita, Krugman, and Venables 1999; Sonobe and Otsuka 2006).”

“Following Fujita et al. (1999), we assume that the adjustment process is governed by the myopic ad hoc dynamic equation: ( ) ( )λλλλ −⋅⋅Δ= 1 d d V t (17) This equation says that the share of labor in region 1 increases when labor realizes higher utility in region 1 than in region 2.”

“…with a system-wide reduction of transport costs for each individual firm which would not change the regional equilibrium.6 As is well known from FUJITA et al. (1999), COMBES et al. (2008) or FUJITA and THISSE (2013), this is not true in a monopolistic competition framework where a…”

“…knowledge for spatiotemporal prediction; non-parametric methods (Capilla 2008)—essentially time series approaches to handle imperfect data from longitudinal observations; and coreperiphery models (Krugman 1991; Fujita et al. 1999), which have revealed interactions between trade and cities.”

“The evolution of the Portuguese economy over the 20th century shows no clear relationship between convergence of incomes per capita with the rest of 2 See also Barro and Sala-i-Martı́n (1991), Fujita et al. (1999) and Combes et al. (2008) provide a useful background in economic geography.”

“Source: own realization based on Eurostat data and Guerrero (2014). 8 of 26 .”

“…separately developed recent literatures (Acs & Varga, 2002): the endogenous growth theory (Romer, 1990; Aghion & Howitt, 1998), the systems of innovation school (Lundvall, 1992; Nelson, 1993), and the new economic geography literature (Krugman, 1991; Fujita et al., 1999; Fujita & Thisse, 2002).”