This paper analyses some of the forces that are changing the spatial distribution of activity in the world economy. It draws on the 'new economic geography' literature to argue the importance of increasing returns to scale and cumulative causation processes in shaping the productivity and comparative advantage of different regions. In the presence of such increasing returns there may be persistent spatial disparities in productivity. Economic development will tend to be 'lumpy', with some regions (countries, or smaller areas such as cities) experiencing rapid growth and others being left behind.

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Anthony J. Venables

December 2006     Paper Number CEPDP0767

Download PDF - Shifts in Economic Geography and their Causes

This CEP discussion paper is published under the centre's Trade programme.