The New Economic Geography, Now Middle-aged

It’s almost exactly 20 years since I delivered a set of lectures in Leuven that became the monograph Geography and Trade (Krugman 1991a), which most people consider the beginning of the New Economic Geography. It has, from my point of view, been a great two decades – and not just because of that Swedish thingie. What you have to understand is that in the late 1980s mainstream economists were almost literally oblivious to the fact that economies aren’t dimensionless points in space – and to what the spatial dimension of the economy had to say about the nature of economic forces. You may find this implausible – how could economists fail to take into account facts of life that are part of everyone’s daily experience? –but I can assure you that it was true. I recall a conversation at one conference on the “new growth theory ” in which a fairly eminent economist challenged some of us, in belligerent tones, for any evidence that increasing returns and positive external economies actually play any important economic role. I think I replied “Cities ” – to be greeted with a stare of incomprehension. You might be tempted to say, so much the worse for mainstream economics – and that, as I understand it, has to a large extent been the response of “proper ” economic geographers; indeed,