Location Choice, Linkages and the Spatial Economy: Essays on Theory, Evidence and Heterodox Assessment

Abstract

The essays in this dissertation represent theoretical and empirical contributions to urban economics and regional science, focusing on the growing importance of nonmarket interactions. There is increasing evidence that the process of globalization is rendering the world "spiky" rather than "flat". Nonmarket interactions, such as knowledge spillovers, innovation or amenity-based externalities, play a central role in this process. As economic activity is not evenly spread across space, a detailed understanding of the economic linkages between regions is key to the design of effective public policy. This is particularly important in the context of economic linkages between regions or cities, highlighting the key adjustment mechanisms -- via both market and nonmarket transactions -- and their long-run implications for incomes, the cost of living, and the spatial distribution of population. Both the neoclassically-grounded field of urban economics and the rapidly expanding New Economic Geography (NEG) literature pioneered by Krugman offer a variety of models and (not infrequently competing) predictions about the factors and processes that shape the spatial structure of the economy. At the same time, the dialogue between qualitative and quantitative discourses in regional science has been marred by an increasingly embittered dispute over methodology. While acutely pronounced in economics, this development has re-shaped large parts of its sister disciplines as well, particularly sociology and geography. Across the board, proponents of quantitative science methodology increasingly likened themselves to their natural science counterparts, whereas qualitative methods had become the last bastion of "true social scientists". Today, these so-called "science wars" have rendered "qualitative" and "quantitative" analysis into almost mutually exclusive concepts.