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The Empirics of New Economic Geography



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The Empirics of New Economic Geography Stephen J Redding LSE Yale School of Management and CEPR May 12 2009 Abstract Although a rich and extensive body of theoretical research on new economic geography has emerged empirical research remains comparatively less well developed This paper reviews the existing empirical literature on the predictions of new economic geography models for the distribution of income and production across space The discussion highlights connections with other research in regional and urban economics identification issues potential alternative explanations and possible areas for further research Keywords New economic geography market access industrial location multiple equilibria JEL F12 F14 O10 This paper was produced as part of the Globalization Programme of the ESRC funded Centre for Economic Performance at the London School of Economics Financial support under the European Union Research Training grant MRTN CT 2006 035873 is gratefully acknowledged I am grateful to the editor Gilles Duranton my discussant Kristian Behrens and participants at the Journal of Regional Science 50th Anniversary Symposium at the Federal Reserve Bank of New York for helpful comments and suggestions I am also grateful to a number of co authors and colleagues for insight discussion and comments including in particular Tony Venables and also Guy Michaels Henry Overman Esteban Rossi Hansberg Peter Schott Daniel Sturm and Nikolaus Wolf I bear sole responsibility for the opinions expressed and any errors Department of Economics London School of Economics Houghton Street London WC2A 2AE United Kingdom Tel 44 20 7955 7483 Fax 44 20 7955 7595 Email s j redding lse ac uk Web http econ lse ac uk staf f sredding 1 1 Introduction Over the last two decades the uneven distribution of economic activity across space has received renewed attention with the emergence of the new economic geography literature following Krugman 1991a which was a key part of the citation for Paul



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