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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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Keywords: Regions Trade integration Regional disparity Growth Scale effects;

References

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Citations

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Cited by:
  1. 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.
  2. Benjamin Montmartin & Nadine Massard, 2013. "Is financial support for private R&D always justified ? A discussion based on literature on growth," Working Papers halshs-00864011, HAL.
  3. Davis, Colin & Hashimoto, Ken-ichi, 2014. "Patterns of technology, industry concentration, and productivity growth without scale effects," Journal of Economic Dynamics and Control, Elsevier, vol. 40(C), pages 266-278.
  4. 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.
  5. Akinori Tanaka & Kazuhiro Yamamoto, 2013. "Trade costs, wage difference, and endogenous growth," Papers in Regional Science, Wiley Blackwell, vol. 92(4), pages 831-850, November.
  6. 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.
  7. 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.
  8. 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.

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