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DP3208 Spatial Agglomeration Dynamics

Author(s): Danny Quah
Publication Date: February 2002
Keyword(s): cluster , continuous space , convergence , distribution dynamics , globalization , growth , Knowledge , spatial spillovers , saddlepath dynamics , spatial inequality
JEL(s): D30 , O10 , O41
Programme Areas: International Macroeconomics
Link to this Page: www.cepr.org/pubs/dps/DP3208.asp


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.

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