The uneven geographical distribution of economic activities is a huge challenge worldwide and
also for the European Union. In Krugman¿s New Economic Geography economic systems have a simple
spatial structure. This book shows that more sophisticated models should visualise the EU as an
evolving trade network with a specific topology and different aggregation levels. At the
highest level economic geography models give a bird eye¿s view of spatial dynamics. At a
medium level institutions shape the economy and the structure of (financial and labour)
markets. At the lowest level individual decisions interact with the economic social and
institutional environment the focus is on firms¿ decision on location and innovation. Such
multilevel models exhibit complex dynamic patterns ¿ path dependence cumulative causation
hysteresis ¿ on a network structure and specific analytic tools are necessary for studying
strategic interaction heterogeneity and nonlinearities.
