Working Paper: CEPR ID: DP2293
Authors: Danny Quah
Abstract: Internet development holds the promise of transmitting economic value across physical space at zero marginal cost. In such a 'weightless economy', what factors matter for the location of economic activity and thus for economic development? This paper sketches a model of spatial dynamics over a three-dimensional globe, where transportation costs don't matter. The paper develops conditions under which clusters of activity emerge.
Keywords: distribution; dynamics; economic geography; internet; location; space; time; Toeplitz; weightless economy; waves
JEL Codes: D30; O10; O18; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| productivity spillovers (O49) | clustering of industries (R32) |
| stickiness of factor inputs (F16) | clustering of industries (R32) |
| reduction of transportation costs (L91) | clustering of industries (R32) |
| historical inertia and presence of universities (N93) | clustering of industries (R32) |