The empirical performance of the NEG with reference to small areas

The New Economic Geography (NEG) has moved from being almost purely theoretical to now becoming a basis for empirical research. The question is, given its origins in international economics, can the NEG model explain the economic geography of small regions within countries? This article reviews some of the literature relating to this question, concluding that we should consider simpler, easier to estimate rival models rather than assume that NEG will be successful at a low level of spatial aggregation.