Spatial perspectives on new theories of economic growth

Abstract.

A new wave of interest in long-run economic growth emerged since the late 1980s. This paper uses a simple model to illustrate how technological change can be endogenised in macroeconomic theories of growth and then surveys how – through factor mobility, the diffusion of innovations and trade – spatial interdependence in a system of regions can influence technological change and growth. Endogenous technological change generates in our illustrative model long-run steady-state growth in a closed economy. However, it turns out that the dynamic impact of spatial interdependence depends on the specification of the model. Spatial convergence, a steady state with persisting spatial differences in growth rates and unstable growth are all theoretically possible. Issues relating to the role of aggregate demand and policy also receive attention. There is much scope for further theoretical and empirical work on endogenous growth in a spatial-economic context, while a better integration of micro and macro level approaches is also desirable.