Modelling network interdependencies of regional economies using spatial econometric techniques

Abstract

Multiregional dynamic models of economic growth rarely capture the interdependencies among regions that are geographically distant and/or often underestimate the importance of these linkages. This bias has become more and more serious because travel and transportation costs continue to decrease, while new telecommu-nication and information technologies enable business activities to readily take place between geographically remote locations. The conceptual framework in this study-modelling the network of regions-is based on well-known spatial economet-ric methods and provides alternative ways to inte-grate network interdependencies of economic ac-tivities into many fields, as well as modelling tech-niques such as spatial computable general equilib-rium, input-output, and dynamic econometric models.