Did Kaldor anticipate the New Economic Geography? Yes, but

Aditya Bhattacharjea

Cambridge Journal of Economics, 2010, vol. 34, issue 6, 1057-1074

Abstract: After providing a self-contained introduction to the branch of mainstream economics known as the 'New Economic Geography' (NEG), this paper shows that many of its basic assumptions, mechanisms, results and policy prescriptions were anticipated by Nicholas Kaldor more than two decades earlier. A comparative assessment foregrounds the strengths and weaknesses of the two approaches. Kaldor inappropriately clubbed together several very different types of scale economies and failed to explain the dispersion of manufacturing activities in a satisfactory way. NEG sidesteps distributional issues, makes questionable predictions, analyses development and structural change as movements between static equilibria and ignores or caricatures history. Some seemingly fundamental methodological differences, involving Kaldor's dynamic perspective and his disdain for equilibrium analysis based on optimising 'microfoundations', are not irreconcilable in light of his later writings and recent extensions of NEG. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Date: 2010
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