PROFITABILITY AND GROWTH IN MULTIREGION SYSTEMS - THEORY AND A MODEL

Interpretations of geographic changes in production over the last 20 y ears have themselves drawn upon theories of global economic change. In turn those theories rely upon models of economic dynamics that rest u pon unduly restrictive notions of equilibrium and that ignore space an d region. This paper therefore explains a multiregion dynamic model of profitability capital investment, and value that eschews notions of e quilibrium. The model, even in its general form, demonstrates that val ues are spatially variable; that net flows of capital occur between re gions even if rates of profit are equal; that net flows of capital do not necessarily point to higher profit locations; and that the traject ory of rates of profit depends not only upon the traditional notions o f organic composition and rate of exploitation but also upon the rates of growth of demand, supply, and capital, as well as upon trade and i nvestment policies. The next stage of this research is to use empirica l observation to estimate the parameters of the model so as to illustr ate its usefulness in interpreting the historical geography of product ion in the OECD.