ABSTRACT
This chapter surveys the theories that, since the mid-1970s, have endeavoured to make economic analysis incorporate a concept of space that performs an active role in defining the patterns of a local area's economic development. With these theories, the concept of 'space' gives way to that of 'territory' as a factor generating economic advantages for the activities located in it. The theory of the industrial district which originated in the work of the great neoclassical economist Alfred Marshall was the first to conceptualize external economies as sources of territorial competitiveness. Macro-territorial approach is that explanation of urban growth requires true consideration of the time dimension, and that for this reason agglomeration economies in their static version must be replaced by a concept of dynamic agglomeration economies. A new model, named supply-oriented urban dynamics (SOUDY), was conceived with the aim of superseding the assumption of the 'optimal city size theory' that cities are all similar.
