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legitimized the role of increasing returns and circular causation with a neat model thirty-five years ago?
But it didn't happen, and perhaps couldn't. Those economists who were attracted to the idea of powerful
simplifications were still absorbed in the possibilities of perfect competition and constant returns; those
who were drawn to a richer view, like Hirschman, became impatient with the narrowness and seeming
silliness of the economics enterprise.
That the story may have been preordained does not keep it from being a sad one. Good ideas were left
to gather dust in the economics attic for more than a generation; great minds retreated to the intellectual
periphery. It is hard to know whether economic policy in the real world would have been much better if
high development theory had not decayed so badly, since the relationship between good economic
analysis and successful policy is far weaker than we like to imagine. Still, one wishes things had played
out differently.
The Exile of Economic Geography
The story of economic geography is a bit different from that of development theory. For one thing, the
modeling is considerably harder. The Murphy et al. Big Push story looks like something that could have
been done forty years ago, had anyone happened on the right way to think about the problem. The
spatial model presented in the appendix does not it requires a sort of layering of technical tricks
developed piece by piece over the past twenty years, and at the end I rely on simulation exercises of a
kind that have only become easy to do on a desktop in the last few years. And I should admit that not
everyone thinks that I have solved the problem of how to do spatial economics, or even
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