Space and Growth: A Survey of Empirical Evidence and Methods

Tinbergen Institute Working Paper No. TI 04-129/3

34 Pages Posted: 12 Dec 2004

See all articles by Maria Abreu

Maria Abreu

University of Cambridge, Department of Land Economy; Pembroke College

Henri L. F. de Groot

Vrije Universiteit Amsterdam; Tinbergen Institute

Raymond J.G.M. Florax

Purdue University; VU University Amsterdam - Department of Spatial Economics; Tinbergen Institute

Date Written: November 2004


This paper reviews the empirical literature on growth and convergence that has addressed the importance of spatial factors. An important distinction in this literature is the one between absolute and relative location. The literature on absolute location predominantly uses non-spatial econometric techniques, and is strongly linked to the economic growth literature. In contrast, studies on relative location tend to be weakly linked to theory, but apply relatively sophisticated econometric techniques to account for spatial effects. Most studies of the latter type are regional in nature, although there is a growing interest in extending the analysis to a cross-country setting. Both regional and cross-country studies typically make use of so-called spatial process models. Rather than modelling the impediments of space and distance directly, spatial process models start from exogenously provided information about the spatial structure. Our review shows that the usage of simple spatial autoregressive lag and error models abounds in the spatial econometrics literature. We assess the appropriateness of such models, and identify areas of potential concern. The rather weak linkage between theory and operational models, the dominance of 'global' over 'local' spatial association patterns, and the implicit restrictions on spatial interaction induced by many of the habitual specifications of the spatial weights matrix concurrently constitute areas where improvements can be made.

Keywords: Economic growth, geography, natural resources, spillovers, spatial econometrics

JEL Classification: O11, O13, O57, R11, R12

Suggested Citation

Abreu, Maria and de Groot, Henri L.F. and Florax, Raymond J.G.M., Space and Growth: A Survey of Empirical Evidence and Methods (November 2004). Tinbergen Institute Working Paper No. TI 04-129/3, Available at SSRN: or

Maria Abreu

University of Cambridge, Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

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Pembroke College ( email )

Cambridge, CB2 1RF
United Kingdom

Henri L.F. De Groot (Contact Author)

Vrije Universiteit Amsterdam ( email )

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Tinbergen Institute

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Raymond J.G.M. Florax

Purdue University ( email )

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United States
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VU University Amsterdam - Department of Spatial Economics ( email )

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+31 20 444 6004 (Fax)

Tinbergen Institute

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