Spatial development

Klaus Desmet and Esteban Rossi-Hansberg

No 2009-18, Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales

Abstract: We present a theory of spatial development. Manufacturing and services firms located in a continuous geographic area choose each period how much to innovate. Firms trade subject to transport costs and technology diffuses spatially across locations. The result is a spatial endogenous growth theory that can shed light on the link between the evolution of economic activity over time and space. We apply the model to study the evolution of the U.S. economy in the last few decades and find that the model can generate the reduction in the employment share in manufacturing, the increase in service productivity starting in the second part of the 1990s, the increase in the value and dispersion of land rents in the same period, as well as several other spatial and temporal patterns.

Date: 2009-12-16, Revised 2010-05-28
New Economics Papers: this item is included in nep-geo and nep-ure
Note: This paper is included in the IMDEA Social Sciences Working Paper Series through the PROCIUDAD-CM and the Bank of Spain Excellence Programmes
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Related works:
Journal Article: Spatial Development (2014)
Working Paper: Spatial Development (2010)
Working Paper: Spatial Development (2009)
Working Paper: Spatial Development (2009)
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