INNOVATION AND AGGLOMERATION - 2 PARABLES SUGGESTED BY CITY-SIZE DISTRIBUTIONS

One of the critical issues in modern economics is the nature of the ex ternal economies. Are they static or dynamic? Are they localized, nati onal, or international in extent? Are they true technological external economies or do they emerge from market size effects? Empirical studi es of urban development have provided some interesting clues about the nature of spillovers. They let us understand the ''self-organization' ' of economic activity, the way in which economic structures emerge ou t of the unplanned interactions of economic agents.