Venables, Anthony J.2017-08-282017-08-282008https://hdl.handle.net/10986/28041This paper argues that cumulative causation processes are fundamental to understanding growth and development. Such processes derive from spatially concentrated increasing returns to scale including thick market effects, knowledge spillovers, sectoral and urban clustering, and self-reinforcing improvements in physical and social infrastructure. These sources of agglomeration have been extensively analyzed in the economic geography literature. They imply that spatial unevenness in economic activity and incomes is an equilibrium outcome. Growth tends to be 'lumpy,' with some sectors in some countries growing fast while other countries lag. The policy challenge is to lift potential new centers of economic activity to the point where they can reap the productivity and investment climate advantages of increasing returns and cumulative causation.en-USCC BY 3.0 IGOAVERAGE COSTSBIDCAPITAL INVESTMENTSCHECKSCHLORINECLIMATE CHANGECOMPARATIVE ADVANTAGECOMPETITIVE MARKETCONSUMERSCOORDINATION FAILURECOORDINATION FAILURESCOUNTRY CASEDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT PRACTITIONERSDIMINISHING RETURNSDIMINISHING RETURNS TO SCALEDIVISION OF LABORECONOMIC ACTIVITYECONOMIC BENEFITSECONOMIC DEVELOPMENTECONOMIC GEOGRAPHYECONOMIC GROWTHECONOMIC LITERATUREECONOMIC PERFORMANCEECONOMIC POLICIESECONOMIC POLICYECONOMIC PROCESSESECONOMIC PROGRESSECONOMIC REFORMSECONOMIC RESEARCHECONOMIC REVIEW PAPERSECONOMIC THEORYECONOMICSECONOMIES OF SCALEEMPIRICAL WORKEMPLOYMENTENVIRONMENTALEQUILIBRIUMEQUIPMENTEXPORT DIVERSIFICATIONEXPORT GROWTHEXPORTSEXTERNALITIESEXTERNALITYFACTOR ENDOWMENTSFACTOR MARKETSFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL SECTORFISCAL POLICIESFOREIGN MARKETFOREIGN MARKETSGDPGDP PER CAPITAGENERAL EQUILIBRIUMGLOBAL ECONOMYGLOBAL MARKETSGLOBALIZATIONGOVERNMENT INVESTMENTGOVERNMENT SPENDINGGREENHOUSE GASESGROWTH PROCESSGROWTH PROSPECTSGROWTH THEORYHUMAN CAPITALINCOMEINCOME DISTRIBUTIONSINCOME GROWTHINCOME LEVELSINCREASING RETURNSINCREASING RETURNS TO SCALEINDUSTRIAL POLICYINDUSTRIALIZED COUNTRIESINFORMAL ECONOMYINNOVATIONINTERMEDIATE GOODSINTERMEDIATE INPUTSINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINTERNATIONAL TRADEINVESTINGINVESTMENT CLIMATEINVESTMENT CLIMATESLABOR FORCELABOR MARKETLABOR MOBILITYLEVEL PLAYING FIELDLONG RUNLONG-RUN GROWTHLOW-INCOME COUNTRIESMACROECONOMIC ENVIRONMENTMACROECONOMICSMARKET ACCESSMARKET FAILURESMARKET MECHANISMMARKET MECHANISMSMARKET SIZEMONETARY FUNDMULTIPLE EQUILIBRIANATURAL RESOURCESNPLOPPORTUNISTIC BEHAVIORPECUNIARY EXTERNALITIESPER CAPITA INCOMEPOLICY CHANGEPOLICY IMPLICATIONSPOLICY INSTRUMENTPOLICY INTERVENTIONPOLICY ISSUESPOLICY MAKERSPOLICY MEASURESPOLICY RESPONSESPOLITICAL ECONOMYPOLLUTIONPOVERTY REDUCTIONPRICE CHANGESPRICE DIFFERENCESPRO-POORPRO-POOR GROWTHPRODUCERSPRODUCT DIFFERENTIATIONPRODUCT MARKETSPRODUCTION PATTERNSPRODUCTION PROCESSPRODUCTIVITYPROPERTY RIGHTSPUBLIC GOODSPUBLIC SECTORRAPID GROWTHRECIPROCAL EXTERNALITIESRELATIVE INCOMERENTSRETURNRULE OF LAWSCALE EFFECTSSECTOR ACTIVITYSECURE PROPERTY RIGHTSSUPPLIERSTERMS OF TRADETHEORETICAL MODELSTRADE BARRIERSTRADE LIBERALIZATIONTRADE POLICYTRADINGVALUE ADDEDWAGE RATESWAGESWORLD INCOME DISTRIBUTIONWorking PaperWorld Bank10.1596/28041