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Edited by Roberta Capello and Peter Nijkamp
3 Location/allocation of regional growth Gunther Maier and Michaela Trippl 3.1 Introduction In this chapter we look at the spatial distribution of regional growth. The main goal is to analyse the implications that various theories of regional growth have for the spatial distribution of economic activities and the long-term dynamics of the regional economy. Two views will be considered: ﬁrst, the view of the neoclassical model; second, that of endogenous growth theory and new economic geography. The neoclassical model is brieﬂy presented in section 3.2 of the chapter. Section 3.3 sketches the main features of endogenous growth theory and new economic geography. We will argue that endogenous growth theory and new economic geography apply the same basic logic, namely to introduce externalities into a general equilibrium model. In our view, the introduction of externalities, which according to endogenous growth theory is necessary in order to understand long-term growth processes, is the main innovation of the new theories. The implications of this step, however, are dramatic. We discuss them in sections 3.4 and 3.5 of the chapter. Brieﬂy speaking, externalities lead to non-linearities in the growth process which may generate complex system dynamics including chaotic behaviour. These models call into question most of the results of the neoclassical theory with the corresponding consequences for economic policy. Conclusions are drawn in section 3.6 of the chapter. 3.2 The allocation of growth in the neoclassical model The standard neoclassical model of regional growth serves as a reference model in our discussion....
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