DP3208 Spatial Agglomeration Dynamics

Author(s): Danny Quah
Publication Date: February 2002
Keyword(s): cluster, continuous space, convergence, distribution dynamics, globalization, growth, Knowledge, saddlepath dynamics, spatial inequality, spatial spillovers
JEL(s): D30, O10, O41
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3208

This Paper develops a model of economic growth and activity locating endogenously on a 3-dimensional featureless global geography. The same economic forces influence simultaneously growth, convergence, and spatial agglomeration and clustering. Economic activity is not concentrated on discrete isolated points but instead a dynamically-fluctuating, smooth spatial distribution. Spatial inequality is a Cass-Koopmans saddlepath, and the global distribution of economic activity converges towards egalitarian growth. Equality is stable but spatial inequality is needed to attain it.