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Trade integration and regional disparity in a model of scale-invariant growth

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  • Minniti, Antonio
  • Parello, Carmelo Pierpaolo

Abstract

This paper explores the relation between trade integration, economic growth and regional inequality in a two-region model of endogenous industry location and scale-invariant growth. We depart from recent contributions of New Economic Geography in that our model does not exhibit the "strong" scale effect in R&D which is inconsistent with time-series evidence from advanced OECD economies. In contrast with previous research, we find that, when R&D spillovers are localized, trade integration affects economic growth only in the short-run; the sign of this (temporary) effect depends on whether intertemporal knowledge spillovers in R&D are positive or negative. We show that this result has important implications for the relation between trade integration and regional income disparity.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 41 (2011)
Issue (Month): 1 (January)
Pages: 20-31

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Handle: RePEc:eee:regeco:v:41:y:2011:i:1:p:20-31

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Web page: http://www.elsevier.com/locate/regec

Related research

Keywords: Regions Trade integration Regional disparity Growth Scale effects;

References

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Citations

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Cited by:
  1. Colin Davis & Ken-ichi Hashimoto, 2012. "R&D Subsidies, International Knowledge Dispersion, and Fully Endogenous Productivity Growth," Discussion Papers 1214, Graduate School of Economics, Kobe University.
  2. Katsufumi Fukuda, 2013. "The Effects of Globalization on Regional Inequality in a Model of Semi-Endogenous Growth and Foot-loose Capital," Discussion Paper Series DP2013-25, Research Institute for Economics & Business Administration, Kobe University.
  3. Benjamin Montmartin & Nadine Massard, 2013. "Is Financial Support for Private R&D Always Justified? A Discussion Based on the Literature on Growth," GREDEG Working Papers 2013-34, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  4. TANAKA Akinori & YAMAMOTO Kazuhiro, 2012. "Trade Costs, Wage Difference, and Endogenous Growth," Discussion papers 12070, Research Institute of Economy, Trade and Industry (RIETI).
  5. Colin Davis & Ken-ichi Hashimoto, 2011. "Patterns of Technology, Industry Concentration, and Productivity Growth Without Scale Effects," Discussion Papers 1106, Graduate School of Economics, Kobe University.
  6. Benjamin Montmartin & Nadine Massard, 2013. "Is financial support for private R&D always justified ? A discussion based on literature on growth," Working Papers 1328, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  7. Colin Davis & Ken-ichi Hashimoto, 2014. "Industry Concentration, Knowledge Diffusion, and Economic Growth Without Scale Effects," Discussion Papers 1408, Graduate School of Economics, Kobe University.
  8. Sabine D'Costa & Enrique Garcilazo & Joaquim Oliveira Martins, 2012. "The effects of nation-wide policies on regional growth," ERSA conference papers ersa12p745, European Regional Science Association.

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