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International R&D subsidy competition, industrial agglomeration and growth

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  • Kondo, Hiroki

Abstract

I construct a model with endogenous growth and new economic geography. Using this framework, I consider the outcomes of R&D subsidy competition among countries under different trade costs. When trade costs are higher, less industrialized countries are more eager to attract industries with vertical linkages. To prevent the industries from relocating, more industrialized countries choose much higher R&D subsidies. As a result, the industries never relocate and the growth rate is very high. When trade costs decrease, countries are less willing to host industries with vertical linkages. R&D subsidy competition becomes less intense, and the growth rate decreases.

Suggested Citation

  • Kondo, Hiroki, 2013. "International R&D subsidy competition, industrial agglomeration and growth," Journal of International Economics, Elsevier, vol. 89(1), pages 233-251.
    • Handle: RePEc:eee:inecon:v:89:y:2013:i:1:p:233-251
    DOI: 10.1016/j.jinteco.2012.04.004
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    Cited by:

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    2. Teodora Borota & Fabrice Defever & Giammario Impullitti, 2019. "Innovation union: Costs and benefits of innovation policy coordination," Discussion Papers 2019-14, University of Nottingham, GEP.
    3. Yuxi Chen & Mengting Zhang & Chencheng Wang & Xin Lin & Zhijie Zhang, 2023. "High-Tech Industrial Agglomeration, Government Intervention and Regional Energy Efficiency: Based on the Perspective of the Spatial Spillover Effect and Panel Threshold Effect," Sustainability, MDPI, vol. 15(7), pages 1-29, April.
    4. Sarpong, David & Boakye, Derrick & Ofosu, George & Botchie, David, 2023. "The three pointers of research and development (R&D) for growth-boosting sustainable innovation system," Technovation, Elsevier, vol. 122(C).
    5. Rikard FORSLID & OKUBO Toshihiro, 2024. "R&D Subsidies and Multi-product Firms," Discussion papers 24015, Research Institute of Economy, Trade and Industry (RIETI).
    6. Chu, Angus C. & Cozzi, Guido & Lai, Ching-Chong & Liao, Chih-Hsing, 2015. "Inflation, R&D and growth in an open economy," Journal of International Economics, Elsevier, vol. 96(2), pages 360-374.
    7. Wang, Qian & Wang, Yanan & Chen, Wei & Zhou, Xue & Zhao, Minjuan & Zhang, Bangbang, 2020. "Do land price variation and environmental regulation improve chemical industrial agglomeration? A regional analysis in China," Land Use Policy, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Spatial agglomeration; Endogenous growth; R&D subsidy; Globalization; Trade costs;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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