The Ageing of Economic Regions

Regional disparities can be seen as a result of diverging adaptability which is essentially due to externalities concerning the collecting and processing of information. The regional cycle hypothesis claims that diseconomies of information may originate from the very process of growth, causing a turning point in the regional development and leading to sclerosis. Evidence in support of this hypothesis is provided by systematic differences in economic behaviour in two regions of similar sectoral composition but strikingly different performance.