The empirical relevance of geographical economics

Some parts of the world are clearly more developed than others. Not only do large disparities in economic prosperity persist between countries; also between regions in the same country, or between cities in the same region large differences in welfare are often the rule rather than the exception. Geographical economics – the study of where economic activity takes place, and why – offers theoretical explanations for these observed spatial patterns of economic development and explains how economic activity in one place may influence that in another. This thesis assesses the empirical relevance of these theories. It identifies, discusses, and offers solutions to, some of the problems involved when taking the insights from geographical economic theory to the data. Using data at various geographical scales and employing different econometric techniques, it shows the relevance of geographical economic theory in understanding such diverse issues as the differences in economic success between Sub-Saharan African countries, the observed increase in regional inequality in South Africa after the end of the Apartheid regime, and the long-term effects of the heavy destruction during World War II on West German cities.