Regional Dynamics in an Isolated State

Abstract

Chapter 6 propounded a regional model with spatial structures. But the model is static as we neglect dynamics of any growth factors. This chapter will extend the model proposed in Chapter 6 to deal with issues of regional dynamics with spatial structures. This chapter develops a dynamic urban model synthesizing the two main approaches in urban economics. The former is mainly initiated in the seminal work of von (1826) and further developed in the pioneering works by (1956), (1957), (1961) and (1964). The review of the current literature can be found, e.g., in (1989). This approach explains static spatial pattern without explaining growth mechanisms, such as capital and knowledge accumulation (not to say population growth and trades), of cities. The latter, i.e., the neoclassical urban growth theory, is mainly concerned with economic mechanisms of urban growth (e.g., Henderson, 1985). But it neglects structural pattern formation process. The purpose of this chapter is to suggest a compact framework by combining the basic ideas of these approaches to explain urban dynamics with endogenous urban pattern and capital and knowledge accumulation.