Long-run development of a multi-regional economy

This article analyses models of a multi-regional economy with n regions and m factors, with a Cobb-Douglas or CES production function, and with or without economies of scale and Hicks-neutral technological progress, in which factors are imperfectly mobile as described by a revised gravity model. The article clarifies the incidence of interregional factor mobility, conditions of convergence of interregional per-capita income, the long-run equilibrium regional shares of factors and of income, and the convergence speed. The results are further generalised by explicitly introducing interregional distances.