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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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“in a spatial concentration of economic activity, or agglomerations (Fujita et al., 2001; Helpman & Krugman, 1985; Krugman, 1991; Krugman & Venables, 1995).”
BackgroundChinese Roads in India: The Effect of Transport Infrastructure on Economic Development
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“The higher average annual wage can disperse industry due to high costs (Fujita et al., 1999), but at the same time, higher wages mean greater market demand: the impact of a higher wage is therefore not clear a priori, because it can motivate firms to move away (because of higher costs) or attract new firms to the regi…”
InfluentialTransport Development, Regional Concentration and Economic Growth
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“…rising negative externalities resulting from economic concentration, the transport cost decline may encourage firms to disperse from core regions into peripheral areas when transport costs are sufficiently low (Acs and Varga, 2002; Fujita et al., 1999; Krugman and Venables, 1995; and Puga, 1999).”
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“This can be a borderless homogenous economic plane, as in central place theory and the Weber model (McCann, 2002), or a circle or horizontal line, as is frequently done in new economic geography (NEG) models (Krugman, 1993; Fujita, Krugman, and Venables, 1999).”
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“2For a comprehensive statement of the underlying modeling structure, see Fujita et al. (1999).”
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A probabilistic modeling approach to the detection of industrial agglomerations
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“, Fujita, Krugman and Venables [20] and Combes, Mayer and Thisse [9] for an overview of the literature.”
BackgroundEvaluating multiple spatial dimensions of economic growth in Brazil using spatial panel data models
Resende, G., de Carvalho, A. X. Y., Sakowski, P. A. M., & Cravo, T. A. (2015) · The Annals of Regional Science · doi:10.1007/s00168-015-0706-9 · Cited by 50
“…spillovers—such as those created by a specialized market for labor or output, or forward and backward linkages drawn from trade in intermediate goods—that are related to increasing returns at the firm level, as noted by contributors from the so-called new economic geography (Fujita et al. 1999).”
BackgroundKonwergencja gospodarcza w krajach OECD w świetle zagregowanych modeli wzrostu
Malaga, K. (2004) · Biblioteka Główna Uniwersytetu Ekonomicznego w Poznaniu · Cited by 48
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“The question of how the spatial distribution of economic activity comes about is the main feature of the new economic geography literature (NEG); see Fujita, Krugman and Venables (1999).”
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“New economic geography takes a long-term perspective on trade-related effects by emphasizing the role of increasing returns in creating and perpetuating regional inequalities (Krugman 1991; Fujita, Krugman, and Venables 1999).”
BackgroundAnderson, K. (2004) · Cambridge University Press eBooks · doi:10.1017/cbo9780511492624.011 · Cited by 48
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“The two-sector distinction reflects some key insights from modern theories of economic agglomeration and trade (Fujita et al., 1999; Glaeser et al., 1991; Krugman, 1990; Melitz, 2003; Porter, 1998).”
BackgroundSpatial Mobility of Knowledge: A Proposal for a More Realistic Communication Model
Meusburger, P. (2009) · disP - The Planning Review · doi:10.1080/02513625.2009.10557033 · Cited by 48
“Therefore, I question the assumption shared by Fujita et al. (1999), Maskell and Malmberg (1999) and many others, that the more codified or the more public the knowledge involved, the more mobile it is and that knowledge, once codified, is almost instantly available to all firms at zero cost…”
BackgroundWhat drives FDI in Central–Eastern Europe? Evidence from the IWH-FDI-Micro database
Gauselmann, A., Knell, M. S., & Stephan, J. (2011) · Post-Communist Economies · doi:10.1080/14631377.2011.595148 · Cited by 47
“Fujita et al. (1999) emphasise the importance of cross-border regional factors that influence the decision-making process for engaging in FDI.”
BackgroundDevelopment of Science and Technology Parks in China, 1988–2008
Zhang, H., & Sonobe, T. (2011) · Economics · doi:10.5018/economics-ejournal.ja.2011-6 · Cited by 47
“Agglomeration economies have been discussed in the literature on trade, urban economics, and economic geography as well as growth theory (e.g., Helpman 1984; Henderson 1988; Fujita et al. 1999; Romer 1986).”
BackgroundPresutti, M., Boari, C., & Majocchi, A. (2013) · Entrepreneurship and Regional Development · doi:10.1080/08985626.2012.760003 · Cited by 52
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“As it has been described by Fujita et al (1999), industrial concentration can arise as a consequence of the interaction of centripetal and centrifugal forces, which are caused by several mechanisms related to labour mobility (real wages differentials) and inter-industry input-output linkages (need…”
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“Space enters spatial economics models in many forms and on different scales of realism (Fujita et al., 1999).”
BackgroundLabor Market Integration in the Presence of Social Capital
Schiff, M. (1999) · World Bank policy research working paper · doi:10.1596/1813-9450-2222 · Cited by 47
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BackgroundTHE ROLE OF TRANSPORTATION IN U.S. ECONOMIC DEVELOPMENT: 1840–1860*
Herrendorf, B., Schmitz, J. A., & Teixeira, A. (2012) · International Economic Review · doi:10.1111/j.1468-2354.2012.00697.x · Cited by 46
“Note that we assume constant returns in manufacturing although the economic geography literature typically assumes increasing returns; see Fujita et al. (1999) for a review of this literature.”
BackgroundAmenities, Quality of Life, and Regional Development
Mulligan, G. F., & Carruthers, J. I. (2011) · Social indicators research series · doi:10.1007/978-94-007-1742-8_5 · Cited by 46
“Cities increasingly compete with one another in providing these amenities – consider the more visible examples of green spaces and public transportation systems (Henderson 1974; Fujita et al. 1999).”
BackgroundSpatial disparities across labour markets
Overman, H. G., & Xu, X. (2024) · Oxford Open Economics · doi:10.1093/ooec/odae005 · Cited by 57
Comparative Spatial Dynamics of Regional Systems
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Economic Linkages across Space
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“The industry is monopolistically competitive, so the number of firms in each location is determined by a zero-profit condition.9 This condition is the key part of the EE relationship, and in the literature is sometimes referred to as the wage equation (FUJITA et al., 1999).”
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“However, Holz (2005), Chow (2006) and Bai et al.”
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“Local economic development has been an area of research for several decades (Lösch, 1954; Fujita et al, 1999; Terluin, 2003; Morgan, 2010).”
BackgroundGreen cities? Urbanization, trade, and the environment
Borck, R., & Pflüger, M. (2018) · Journal of Regional Science · doi:10.1111/jors.12423 · Cited by 43
“Without the urban sector involving endogenous lots, the short‐run equilibrium is as in Krugman’s CP model, so that a symmetric skilled wage of unity obtains under suitable normalizations (see Fujita et al., 1999). Murata and Thisse (2005) 752 | BORCK AND PFLÜGER”
Cities, regions and the decline of transport costs
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Balisacan, A. M. (2003) · doi:10.1093/0195158989.003.0010 · Cited by 48
A Cluster-Based Industrial Development Policy for Low-Income Countries
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“According to the theory of agglomeration economies (e.g., Henderson 1988; Fujita, Krugman, and Venables 1999), moreover, the mitigation of congestion allows the central areas to accommodate more innovative industrial activities, thereby contributing to further economic growth.”
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REGIONAL POPULATION–EMPLOYMENT DYNAMICS ACROSS DIFFERENT SECTORS OF THE ECONOMY*
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“Aujourd’hui, cette négligence est en train d’être en partie comblée par des économistes qui s’intéressent aux économies d’agglomération et à la dynamique régionale (voir, par exemple, Fujita et al. , 1999).”
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“Thus, the actual development is congruent with what is predicted in the models developed by Fujita et al. (1999).”
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“A good survey of the recent theoretical developments in economic geography is that of Fujita, Krugman, and Venables (1999).”
BackgroundCluster Dynamics: New Evidence and Projections for Computing Services in Great Britain*
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“This behaviour may be caused by external economies, such as location or urbanization economies, and, according to the so-called New Economic Geography, low transport costs: that is, by better accessibility (Fujita, Krugman, and Venables 1999).”
BackgroundA Recursive Spatial Equilibrium Model for Planning Large-Scale Urban Change
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“The relationships between the economy, activity location, and transport costs have been a focus of new economic geography (Fujita, 1989; Fujita et al, 1999; Krugman, 1991; Venables, 1996) and of spatial general equilibrium models (Anas and Kim, 1996; Anas and Liu, 2007; Bröcker, 1998; Ivanova and…”
BackgroundHigh-growth firms: does location matter?
Pérez, J. M. G., Santa-María, M. J., & Olivares, A. F. (2016) · International Entrepreneurship and Management Journal · doi:10.1007/s11365-016-0392-9 · Cited by 43
“…highly skilled workers within labour markets, knowledge, financial resources, risk capital firms, and high levels of public infrastructure and services (Glancey 1998; Eberts and McMillen 1999; Fujita et al. 1999; Fujita and Thisse 2002; Rosenthal and Strange 2004; Espitia-Escuer et al. 2015).”
BackgroundAn Evolutionary Theory of Urban Systems
Pumain, D. (2018) · Advances in geographical and environmental sciences · doi:10.1007/978-981-10-7799-9_1 · Cited by 43
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Agglomeration, Agriculture, and the Perspective of the Periphery
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“For instance, the Fujita et al. (1999) models26 predict that the population in rural regions should be engaged primarily in agriculture, which would lead to a coincidence between agricultural and rural populations.”
BackgroundSpatial Disparities in Developing East Asia: a survey
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The Way of the Gun: Estimating Firearms Trafficking across the US–Mexico Border
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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
About these checks
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.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
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