The Basic Framework of Economic Agglomerations and Regional Development

Geographers, economists and regional scientists have long been concerned with uneven regional development and the ways by which the unequal regional distribution of economic activity across space influence the process of economic growth among regions. A dominating feature of economic activities is certainly that of agglomerating in certain areas in order to exploit new opportunities like proximity to communication networks, to large population concentrations or to reduce transactions costs, all these leading to localized positive externalities. Benefits of these sorts, known more generally as agglomeration economies, generate increasing returns that seem to stimulate the economic performance of those regions where these agglomerations are located. In this sense, the purpose of this paper is to explore the issue of economic agglomerations and its relationship to regional development. Through a variety of relevant theories and qualitative arguments, we substantiate the reasons why we should have strong expectations about finding a favorable connection between agglomerations and regional development.