The Contribution of New Economic Geography

2020 ◽  
Author(s):  
Pascal Mossay ◽  
Pierre M. Picard
Keyword(s):  
Economic Geography ◽  
Urban Areas ◽  
Multiple Equilibria ◽  
Market Access ◽  
Experimental Methodology ◽  
Empirical Literature ◽  
New Economic Geography ◽  
Spatial Concentration ◽  
Transport Costs ◽  
Economic Activities

New Economic Geography (NEG) provides microeconomic foundations for explaining the spatial concentration of economic activities across regions, cities, and urban areas. The origins of the NEG literature trace back to trade, location, and urbans economics theories. In NEG, agglomeration and dispersion forces explain the existence of spatial agglomerations. A NEG model usually incorporates a combination of such forces. In particular, firm proximity to large markets and the importance of linkages along a supply chain are typical agglomeration forces. Equilibria properties derived from NEG models are very specific to NEG as they involve multiple equilibria and have a very high dependence on changes in parameters. This phenomenon has important implications for the emergence of nations, regions, and cities. In particular, high transport costs imply the dispersion of economic activities, while low transport costs lead to their spatial concentration. The same forces that shape inequalities and disparities between regions also shape the internal structure of cities. Firms concentrate in urban centers to gain greater access to larger demand. The empirical literature has developed several approaches that shed light on spatial agglomeration and estimate the role and impact of transport costs on market access. A key empirical research question is whether observed patterns could be explained by location amenities or agglomeration forces as put forward by NEG. Quasi-experimental methodology is frequently used for such a purpose. NEG theory is supported by empirical evidence, demonstrating the role of market access.

New Economic Geography

2020 ◽  
Author(s):  
Ching-mu Chen ◽  
Shin-Kun Peng
Keyword(s):  
General Equilibrium ◽  
Economic Geography ◽  
Empirical Studies ◽  
Spatial Models ◽  
Reduced Form ◽  
New Economic Geography ◽  
Economic Activities ◽  
Economic Agents ◽  
Spatial Economy ◽  
Spatial Configurations

For research attempting to investigate why economic activities are distributed unevenly across geographic space, new economic geography (NEG) provides a general equilibrium-based and microfounded approach to modeling a spatial economy characterized by a large variety of economic agglomerations. NEG emphasizes how agglomeration (centripetal) and dispersion (centrifugal) forces interact to generate observed spatial configurations and uneven distributions of economic activity. However, numerous economic geographers prefer to refer to the term new economic geographies as vigorous and diversified academic outputs that are inspired by the institutional-cultural turn of economic geography. Accordingly, the term geographical economics has been suggested as an alternative to NEG. Approaches for modeling a spatial economy through the use of a general equilibrium framework have not only rendered existing concepts amenable to empirical scrutiny and policy analysis but also drawn economic geography and location theories from the periphery to the center of mainstream economic theory. Reduced-form empirical studies have attempted to test certain implications of NEG. However, due to NEG’s simplified geographic settings, the developed NEG models cannot be easily applied to observed data. The recent development of quantitative spatial models based on the mechanisms formalized by previous NEG theories has been a breakthrough in building an empirically relevant framework for implementing counterfactual policy exercises. If quantitative spatial models can connect with observed data in an empirically meaningful manner, they can enable the decomposition of key theoretical mechanisms and afford specificity in the evaluation of the general equilibrium effects of policy interventions in particular settings. Several decades since its proposal, NEG has been criticized for its parsimonious assumptions about the economy across space and time. Therefore, existing challenges still require theoretical and quantitative models on new microfoundations pertaining to the interactions between economic agents across geographical space and the relationship between geography and economic development.

scholarly journals Spatial Spillover Effects of Agricultural Transport Costs in Peru

2021 ◽  
Author(s):  
Pedro Herrera-Catalán ◽  
Coro Chasco ◽  
Máximo Torero
Keyword(s):  
Spatial Configuration ◽  
Spillover Effects ◽  
Equilibrium Analysis ◽  
New Economic Geography ◽  
Spatial Equilibrium ◽  
Transport Costs ◽  
Economic Activities ◽  
Flow Models ◽  
Spatial Spillovers

The role of agricultural transport costs in core-periphery structures has habitually been ignored in New Economic Geography (NEG) models. This is due to the convention of treating the agricultural good as the numéraire, thus implying that agricultural transportation costs are assumed to be zero in these models. For more than three decades, this has been the standard setting in spatial equilibrium analysis. The paper examines the effects of agricultural transport costs on the spatial organisation of regional structures in Peru. In doing so, the Krugman’s formulation of iceberg transport costs is modified to introduce the agricultural transport costs into the dynamic of the NEG models. We use exploratory spatial flow data analysis methods and non-spatial and spatial origin-destination flow models to explore how the regional spatial structure change when real transportation data for agricultural goods is included into the iceberg transport costs formulation. We show that agricultural transport costs generate flows that are systematically associated with flows to or from nearby regions generating thus the emergence of spatial spillovers across Peruvian regions. The results of the paper support the contention that NEG models have overshadowed the role of agricultural transport costs in determining the spatial configuration of economic activities.

scholarly journals Les ressources de territoires et les territoires de ressources

Finisterra ◽  
2012 ◽  
Vol 36 (71) ◽  
Author(s):  
Georges Benko ◽  
Bernard Pecqueur
Keyword(s):  
Economic Analysis ◽  
Free Trade ◽  
Economic Geography ◽  
New Economic Geography ◽  
Service Economy ◽  
Economic Activities ◽  
Free Trade Zones ◽  
Spatial Economy ◽  
International Exchanges

economical geography has known a revival since the 1990s; we even speak of a «new economic geography». Globalisation, metropolisation, the formation of free-trade zones, international exchanges, the linking of the global with the local are all themes at the centre of the concern about spatial economy. But globalisation does not necessarily mean homogenisation of the spaces. The notion of territory reappears in economical analyses because territories offer the market resources that are specific, untransferable and incomparable. These specific resources render the areas diversified and stabilize the emplacement of economic activities. In the next few years, one of the main subjects of research in economic analysis will probably be the study of the process of revealing and eveloping new resources that emerge from the uniqueness of the areas and human groups in a context where information logic controls the service economy.

Zur Diskussion gestellt. Erster Nobelpreis für einen „economic geographer“ – eine Bewertung aus Sicht eines Wirtschaftsgeographen

2009 ◽  
Vol 53 (1-2) ◽  
Author(s):  
Rolf Sternberg
Keyword(s):  
Nobel Prize ◽  
Empirical Work ◽  
Good News ◽  
New Economic Geography ◽  
Spatial Equilibrium ◽  
Spatial Concentration ◽  
Economic Activities ◽  
Considerable Effort ◽  
Trading Patterns ◽  
Academy Of Sciences

First Nobel Prize given to an “economic geographer” - a critical assessment from the perspective of a proper economic geographer. This paper critically assesses both the theoretical approach of the New Economic Geography (NEG) developed by US economist Paul Krugman and the decision of the Royal Swedish Academy of Sciences to give him the 2008 “Nobel Prize in Economics” for his work on trading patterns and the spatial concentration of economic activities. This assessment is done from the perspective of a proper economic geographer. The basics of Krugman’s NEG models are presented and discussed in the lights of the state-of-the-art of current theoretical and empirical work on NEG. A considerable effort is undertaken to identify the specific strengths and weaknesses of this attempt to explain spatial concentration of economic activities in the scope of spatial equilibrium models. Despite the fact that most of the proper economic geographers, namely in Germany, have hitherto been quite reluctant in working with NEG models and its propositions the message targeted at economic geographers is clear: they should use the huge potential of the NEG available for empirical and policy-related research more intensively than before. Thus, the decision of the Nobel Prize committee is good news not only for economists interested in spatial concentration, but for proper economic geographers as well.

scholarly journals Ersetzt die Neue Ökonomische Geographie Außenwirtschaftstheorie und Raumwirtschaftstheorie?

2011 ◽  
Vol 62 (3) ◽  
Author(s):  
Klaus Schöler
Keyword(s):  
Economic Geography ◽  
Economies Of Scale ◽  
Monopolistic Competition ◽  
Regional Economics ◽  
New Economic Geography ◽  
Traditional Theory ◽  
Transport Costs ◽  
Trade Theory ◽  
Heterogeneous Goods ◽  
The One

SummaryThe New Economic Geography has two advantages in comparison with the traditional Theory of International Trade. On the one hand, the transport costs are included into the respective models. On the other hand, the factor endowment in the regions or countries is not given in the same way as in the traditional Trade Theory, but it is a result of different transport costs. The New Economic Geography has also great advantages in the field of Regional Economics. It is possible to explain the phenomenon of agglomerations by means of a total microeconomic model with economies of scale in one industry, monopolistic competition and heterogeneous goods. The New Economic Geography completes the traditional theories - Trade Theory and Regional Economics - in important aspects, but does not yet replace these approaches.

Sectors and industry regions – Case study italy

2021 ◽  
Author(s):  
Helmuth Gomez ◽  
Gabriela Antošová
Keyword(s):  
Economic Development ◽  
Economic Geography ◽  
Regional Distribution ◽  
Regional Economic Development ◽  
Uneven Distribution ◽  
New Economic Geography ◽  
Spatial Concentration ◽  
Italian History ◽  
Basic Parameters

The aim of the article is to describe the tangible and lasting uneven regional distribution of manufacturing in Italy, as the result of a historical reinforcing process. In doing so, we cite the basic parameters typically applied by the New Economic Geography approach and try to relate some global developments in the Italian history, with the seemingly outright influence of such specific theoretical parameters. The method is merely descriptive and uses a map and some manufacturing statistics for spotlight the actual sectorial distribution of employment as an evidence of the divergent process. For underpinning the analytical interpretation, we consult the previous contribution of some Italian economists and historians setting forth the consolidation of Italian manufacturing expansion and its startling spatial concentration. The descriptive style of the article ends up highlighting the pervasive influence of historical inertia on the regional economic development and the pertinence of New Economic Geography framework for interpreting the uneven distribution of manufacturing across the space.

Uneven Spatial Development in Russia: Explanations of New Economic Geography

2013 ◽  
pp. 132-150 ◽  
Author(s):  
E. Kolomak
Keyword(s):  
Population Density ◽  
Empirical Analysis ◽  
Economic Geography ◽  
Economic Activity ◽  
Industry Structure ◽  
Regional Disparities ◽  
New Economic Geography ◽  
Spatial Concentration ◽  
The Empirical Analysis ◽  
Regional Divergence

We study the dynamics of inter-regional disparities for a number of characteristics of development, test the hypothesis of the new economic geography. The empirical analysis shows the spatial concentration of economic activity is continuing in Russia and the rate of inter-regional divergence, is rather high. The factors of the spatial concentration and regional disparities in Russia are population density, size and accessibility of markets, as well as the level of diversification and industry structure of the economy.

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