Economic Growth Theory, Clustering, and the Rise of the South

This paper uses the relatively strong economic growth of the South over the past 20 to 30 years as the basis for a discussion of recent developments in economic growth theory. First, three facts about the South’s rise relative to other regions are discussed. This is followed by a discussion of the two leading macroeconomic explanations of economic growth, neoclassical growth theory and endogenous growth theory, showing how endogenous growth theory’s focus on innovation as the engine of growth, and on the externalities related to innovations, might be used to explain key regional characteristics of southern economic growth, such as clustering and uneven growth. The paper concludes with some observations about how the South’s future might unfold in light of these newer growth theories and briefly discusses how the resurgence in inter-est in regional economic growth presents excellent opportunities for regional science.