The aim of this project is to contribute to the study of the impact of economic integration on the geographical distribution of economic activities and how these contribute to shape regional income discrepancies. The main purposes of this work are manifold. First, we incorporate multiple regions to shed light on the complex interactions and interdependencies in a more realistic geographical framework. We look at heterogeneity in both skills and preferences and how they help shape the economic landscape and explain the spatial sorting of agents across different cities and regions as well the formation of urban hierarchies. We study the creation and diffusion of knowledge and innovation across space in New Economic Geography and the interaction between market factors and the former through intra-regional and inter-regional interactions. We evaluate the role of other factors, namely, institutional, economic and political advantages, in the location of economic activity in a framework where agglomeration forces will continue to be present. We study the two conflicting convergence/divergence trajectories over the last 20 years that the European Union (EU28) has experienced: at the country's level there was real convergence between the "poorest" and "richest" countries, but at the regional level convergence has been weaker, with some countries exhibiting regional divergence or sustained North-South or West-East divisions. Finally, we determine how the regions of the European Union and Portugal have differed in their response and recovery from successive negative external shocks, and the extent to which these differences in response and recovery have affected long-run regional growth paths, and hence regional economic disparities. In order to successfully achieve our goals we devise new models that reflect the economic reality and use tools from dynamical systems, in particular with symmetry, bifurcation theory and coupled cell systems. Microeconomic foundations of price competition in dynamic oligopolies will also be instrumental for our purposes.