ABSTRACT
Although the theory behind it still remains incomplete and unsatisfactory, the prevalence of geographical specialization is for sure one of the most spectacular stylized facts of the real-world economy. In the US, everyone would for example immediately associate the car industry with Detroit, movies production with Hollywood, aircraft manufacturing with Seattle, defence and microelectronics with California and so on. At the country level, specific policies labelled as regional development, structural cohesion or country planning are precisely set up to address the economic and social consequences of such specialization: disparities between regions, between metropolitan and rural areas, and even sometimes inside cities. In academic research, there has been in the last few years a spectacular renewal of interest in the economic theory of local specialization and growth. A new literature developed on this classic but somehow neglected topic, with many innovative contributions, such as the emergence of a ‘new economic geography’ (Fujita, Venables and Krugman, 1999), the breaking down of the dynamic components of agglomeration externalities (Dumais, Ellison and Glaeser, 1997; Henderson, 1999) or the revival of the industrial district’s idea in an information economy (Porter, 1998).
