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Did Kaldor anticipate the New Economic Geography? Yes, but..

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  • Aditya Bhattacharjea

Abstract

After providing a self-contained introduction to the branch of mainstream economics known as the 'New Economic Geography' (NEG), this paper shows that many of its basic assumptions, mechanisms, results and policy prescriptions were anticipated by Nicholas Kaldor more than two decades earlier. A comparative assessment foregrounds the strengths and weaknesses of the two approaches. Kaldor inappropriately clubbed together several very different types of scale economies and failed to explain the dispersion of manufacturing activities in a satisfactory way. NEG sidesteps distributional issues, makes questionable predictions, analyses development and structural change as movements between static equilibria and ignores or caricatures history. Some seemingly fundamental methodological differences, involving Kaldor's dynamic perspective and his disdain for equilibrium analysis based on optimising 'microfoundations', are not irreconcilable in light of his later writings and recent extensions of NEG. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Suggested Citation

  • Aditya Bhattacharjea, 2010. "Did Kaldor anticipate the New Economic Geography? Yes, but..," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(6), pages 1057-1074.
    • Handle: RePEc:oup:cambje:v:34:y:2010:i:6:p:1057-1074
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    File URL: http://hdl.handle.net/10.1093/cje/bep069
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    Cited by:

    1. Peter Schmidt, 2014. "EU regional policy and its theoretical foundations revisited," ERSA conference papers ersa14p1560, European Regional Science Association.
    2. Alexandre Gomes, 2020. "Regional economic growth in China from a Kaldorian perspective: A comparative study of Nanjing and Suzhou," PSL Quarterly Review, Economia civile, vol. 73(295), pages 283-312.
    3. Aditya Bhattacharjea, 2019. "Labour Market Flexibility in Indian Industry A Critical Survey of the Literature," Working papers 296, Centre for Development Economics, Delhi School of Economics.
    4. A. P. Thirlwall, 2013. "Commentary on Kaldor's 1970 Regional Growth Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(5), pages 492-494, November.
    5. A. P. Thirlwall, 2014. "Kaldor's 1970 Regional Growth Model Revisited," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(4), pages 341-347, September.
    6. Aditya BHATTACHARJEA, 2021. "Labour market flexibility in Indian manufacturing: A critical survey of the literature," International Labour Review, International Labour Organization, vol. 160(2), pages 197-217, June.

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