Handbook of Regional Growth and Development Theories
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Handbook of Regional Growth and Development Theories

Edited by Roberta Capello and Peter Nijkamp

Regional economics – an established discipline for several decades – has gone through a rapid pace of change in the past decade and several new perspectives have emerged. At the same time the methodology has shown surprising development. This volume brings together contributions looking at new pathways in regional economics, written by many well-known international scholars. The most advanced theories, measurement methods and policy issues in regional growth are given in-depth treatment.
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Chapter 4: Regional Growth and Trade in the New Economic Geography and Other Recent Theories

Kieran P. Donaghy


Kieran P. Donaghy 4.1 Introduction Trade, international or interregional, is essentially the exchange of goods and services over space. By definition, then, it involves transportation and, hence, some transaction costs. Perhaps since the time of the Phoenicians (circa 1200 BC), if not before, trade has been viewed as an engine of expansion of national and regional economies, and many growth theories and growth policies have been predicated on the assumption that growth is export-led. In this time of increasing global economic integration, it is perhaps an article of faith that, as Armstrong and Taylor (2000) put it: ‘Regions, like nations, must actively trade if they are to be prosperous’ (p. 119). But, even as regional economists have looked to international trade theory for accounts of trade-induced growth, growth per se has not been the featured explanandum of trade theory. Rather, the principal intent of trade theory has been to explain patterns of trade and why countries or regions tend to specialize in certain trade-oriented industries. Where interest has been shown in growth by trade theorists, it has more often than not been in how growth shocks – in the forms of technological progress or increased availability of a factor – have affected trade patterns (Gandolfo, 1998). Of course, it is not difficult to reason further from changes in trade patterns to inferences about what the implications may be for a regional economy, as such insightful if iconoclastic theorists as Hirschman (1958) have been ready and willing to do. From...

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