Geography, Endogenous Growth, and Innovation

Abstract

If one is to understand why some regions grow and others stagnate, there are three fundamental questions that need to be answered. First, Why and when does economic activity become concentrated in a few regions, leaving others relatively underdeveloped? Second, What role does technological change play in regional economic growth? Third, How does technological advance occur, and what are the key processes and institutions involved? To answer these three questions, the authors surveyed three separate and distinct literatures that have a long and distinguished history, and all three have been recently reexamined. They include the new economic geography (Krugman), the new growth theory (Romer), and the new economics of innovation (Nelson).