Chapter 60

Agglomeration and Regional Growth

Richard E. Baldwin 1baldwin@hei.unige.ch     Graduate Institute of International Studies, Geneva, Switzerland.

Philippe Martin 2martin-p@mail.enpc.fr     University of Paris 1 Panthéon-Sorbonne, Paris, France.

JEL classification: O40, R11, R12

Abstract

We review the theoretical links between growth and agglomeration. Growth, in the form of innovation, can be at the origin of catastrophic spatial agglomeration in a cumulative process à la Myrdal. One of the surprising features of the Krugman [Journal of Political Economy 99 (1991) 483–499] model, was that the introduction of partial labor mobility in a standard “new trade model” with trade costs could lead to catastrophic agglomeration. The growth ...

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