New Economic Geography: What about the N?

Abstract

Since its very appearance, probably thanks to its provocative name, new economic geography (NEG) has stirred a debate on whether it is economic geography proper or rather geographical economics. In both cases, its real novelty has been questioned. We focus on this last issue. In particular, we argue that many NEG ideas have been around for a long time in the works of economic geographers and location theorists. However, NEG has the fundamental merit of having framed those ideas within a general equilibrium model encompassing most of these ideas. This has drawn economic geography and location theory from the periphery to the center of mainstream economic theory. More importantly, it has made already existing ideas more amenable to empirical scrutiny and policy analysis.