Economic Globalization and Interregional Agglomeration in a Multi-Country and Multi-Regional Neoclassical Growth Model

The purpose of this paper is to extend the well-known Uzawa twosector model for a national economy to a global economy with any number of countries and any number of regions within each country. It studies international and interregional economic development with interactions among wealth accumulation, amenity change and economic structure under assumptions of profit maximization, utility maximization, and perfect competition. The model shows endogenous interregional and international trade patterns on the basis of microeconomic foundation. We deal with the complicated issues by applying Zhang’s alternative approach to households’ behavior. We simulate the motion of the multi-country and multi-region global economy, identify the existence of an equilibrium point, and confirm the stability of the equilibrium point. We carry out comparative dynamic analysis with regard to the total factor productivity of region’s industrial sectors, total factor productivity of region’s service sectors, propensities to save, regional amenity parameters, propensities to consume housing, and the national population effect on amenity.