A Regional Core, Adjacent, Periphery Model for National Economic Geography Analysis



Losch implicitly recognised the importance of backward and forward demand linkages in agglomerate
formation. As previously stated, his use of the term ‘psychological attraction forces’ indicates
individual regional locational utility preferences for both management and labour (Ludema and
Wooton, 1997). Losch’s most salient contribution is the explicit recognition of the role of large urban
centres.

The theoretical economic geography literature is replete with the term agglomeration forces
and multi-agglomerate production structures (Krugman, 1991a; 1991b; Fujita, Krugman, Venable,
1999; Baldwin et.al., 2000). Agglomeration forces focus on home markets. Although the term home
market has never been clearly defined in the literature, its definition is essential for conceptual and
empirical clarity. Agglomeration forces4 focus on a physical geographic location where cumulative
causation creates accumulation (Venables, 1994). This paper introduces the concept of an
agglomerate, to define such a geographic location. An agglomerate is defined as a region with one or
more large urban population centres with respective industrial complexes. Viewed empirically,
Krugman’s (1991b) home market concept is synonymous with a national core region - an
agglomerate.

4 A National Regional Core, Adjacent, Periphery (CAP) Model

The objective of this section is to present the development of a simple three-region model that
classifies a country’s administrative regions into core regions, adjacent regions, and periphery
regions. This section is divided into three parts. The first part focuses on the development of a Core,
Adjacent, and Periphery (CAP) model. The second part defines the mathematical structure behind the
CAP model. The third part explains the criteria, data, and methodology utilised in classifying the

4 The word agglomerate has its origin in the Latin word agglomeratus, the past participle of agglomerare, which means to
heap up, join, to gather into a ball, mass or cluster (Merriam-Webster’s Collegiate Dictionary (10th/ed), Merriam-Webster
Inc., 2000).



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