Introduction

Chapter 1 of this book has presented a number of stylized facts about the clustering of economic activity to justify our inquiry into the relationships between economics and geography. In chapters 2 to 4 we have mainly looked at this relationship from a theoretical point of view. In this chapter we start with a reminder that location matters. This chapter and the next focus on the empirics of geographical economics, in order to assess whether the spatial facts can be explained by geographical economics models as introduced in chapters 3 and 4.

We start with a brief review in section 5.2 of the main facts about the concentration and agglomeration of economic activity. This continues, and partly restates, our discussion of stylized facts of location in chapter 1. Against this background, section 5.3 answers the question of whether these facts can be reconciled with the various economic theories of location presented in chapters 2 to 4. To provide this answer, we summarize the main predictions about clustering (if any) that follow from the various theories, and conclude that the stylized facts are in accordance with multiple theories (and not only with geographical economics). This does not come as a great surprise, since many empirical studies about the concentration or the agglomeration of economic activity are, quite simply, not primarily concerned with the testing of specific theories.