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CEP discussion paper
Spatial Agglomeration Dynamics
Danny Quah
March 2002
Paper No' CEPDP0521:
Full Paper (pdf)

JEL Classification: D30;O10;O41

Tags: cluster; continuous space; convergence; distribution dynamics; growth; knowledge; saddlepath dynamics; spatial spillovers; spatial inequality

This paper develops a model of economic growth and activity locating endogenously on a 3-dimensional featureless global geography. The same economic forces influence simulataneously growth, convergence, and spatial agglomeration and clustering. Economic activity is not concentrated on discrete isolated points but instead a dynamically-fluctuating, smotth spatial distribution. Spatial inequality is a Cass-Koopmans saddlepath, and the global distribution of economic activity converges towards egalitarian growth. Equality is stable but spatial inequality is needed to attain it.