In the last two decades the Indian economy has been growing unabatedly, with memories of the Hindu rate of growth rapidly fading. But this unprecedented growth has also resulted in widening spatial disparities. While cities such as Hyderabad have emerged as major clusters of high development,...

We present a theory of spatial development. A continuum of locations in a geographic area choose each period how much to innovate (if at all) in manufacturing and services. Locations can trade subject to transport costs and technology diffuses spatially across locations. The result is an...