New Economic Geography: Economic Integration and Spatial Imbalances

Abstract

This chapter provides a comprehensive view on the field of New Economic Geography (NEG). It starts by describing the background in adjacent fields of economics which made the surge of NEG possible. It lays out the necessary ingredients and fundamental forces at work that define any NEG framework and provides a pedagogical description of a simple and analytically solvable Core-Periphery model. It then assesses the state of the art in NEG and tracks the evolution of the field, focusing on the several contributions that emerged from the cross-fertilization between NEG and adjacent fields in economics and highlighting the persistent features and assumptions which have thwarted further developments and led to a sprawl of criticism within the field. This criticism has led to the identification of new possible directions, some of which are being progressively undertaken. These new developments have come to shed light on various features of the space economy, such as the regional growth, the spatial sorting of heterogeneous agents and the hierarchical formation of urban systems, among other aspects.