COORDINATION AND BIFURCATION IN GROWING SPATIAL ECONOMIES

Bifurcation of endogenous growth equilibria with infrastructure invest ment affecting productivity through altering levels of coordination of economic activity are studied using interacting particle systems theo ry. Critical levels of infrastructure relative to private capital gene rate discontinuous changes in coordination and thus in general product ivity. Higher coordination is associated with two equilibria, one with positive expectational high growth and one with negative expectationa l low growth. Thus, heightened regional linkages may be associated wit h greater volatility of economic activity.