May 20, 2011

The new economic geography, now middle-aged

In a recent paper, Paul Krugman writes:

A generation ago, mainstream economists hardly thought at all about the location of production within countries; they hardly looked at local and regional data for evidence on such matters as the strength and nature of external economies. The new economic geography was conceived as an effort to change all that, bringing economists into an area the best way I knew how: by developing cute, nifty models.

That effort has succeeded. There are many ways in which the ongoing work in new economic geography can be criticized; one of these valid criticisms is the failure to pay sufficient attention to the work of more traditional economic geographers. But getting economists to think about location and spatial structure is nonetheless significant progress.

His book "Development, Geography, and Economic Theory," is probably the best little book in economics I have read.

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