Incorporating Space in the Theory of Endogenous Growth: Contributions from the New Economic Geography

The unintended consequences of increasing returns to scale in geographical economics

“…Similarities in modelling techniques imply a natural combination of endoge-nous growth models with the new economic geography (NEG) (Bond-Smith and McCann, 2014). This is broadly examined in the toy models above by closing the model with footloose labour.…”

“…The birth of the so-called "new" growth theory emphasized the role of nonrival knowledge spillovers for growth as an input to and output from endogenous investment in innovation in return for temporary monopoly profits (Romer, 1990). The spatial nature of knowledge spillovers (Audretsch and Feldman, 1996) and similarities in modelling techniques implied a suitable marriage between endogenous growth and economic geography (Bond-Smith and McCann, 2014). The continued development of endogenous growth theories over four generations (Bond-Smith, 2019) is repeatedly followed by spatial versions to understand the geographic implications of endogenous growth.…”

A multi-sector model of relatedness, growth and industry clustering

“…The model is an extension of standard core-periphery growth models, which are summarised in Bond-Smith & McCann (2014), to now include several industrial sectors with multiple varieties in each and growth without scale effects. This approach enables knowledge spillovers to be described by differing degrees of technological and spatial separation such that firms take account of the knowledge externalities of related varieties.…”