Patterns of Technology, Industry Concentration, and Productivity Growth Without Scale Effects
AbstractThis paper investigates the relationship between geographic patterns of industrial activity and endogenous growth in a two region model of trade that exhibits no scale effect. The in-house process innovation of manufacturing firms drives productivity growth and is closely associated with firm-level scales of production and relative levels of accessible technical knowledge. Focusing on long-run industry shares and a cross-region productivity gap, we find that dispersed equilibria with positive industry shares for both regions always produce higher growth rates than core-periphery equilibria with all industry locating in one region. Moreover, the highest growth rate arises in a symmetric steady state that features no productivity gap and equal shares of industry leading to the conclusion that the geographic concentration of industry has a negative impact on overall growth. Convergence towards a dispersed equilibrium, however, is contingent on the levels of inter-regional transport costs and knowledge dispersion. Finally, we explore the implications of greater economic integration arising from reduced transport costs and greater knowledge dispersion for patterns of industry and productivity, and for regional welfare levels within a dispersed equilibrium.
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Bibliographic InfoPaper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 1106.
Date of creation: Jun 2011
Date of revision:
Industry Concentration; Industry Share; Productivity Gap; Productivity Growth; Scale Effect;
Find related papers by JEL classification:
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-25 (All new papers)
- NEP-BEC-2011-06-25 (Business Economics)
- NEP-COM-2011-06-25 (Industrial Competition)
- NEP-CSE-2011-06-25 (Economics of Strategic Management)
- NEP-EFF-2011-06-25 (Efficiency & Productivity)
- NEP-FDG-2011-06-25 (Financial Development & Growth)
- NEP-GEO-2011-06-25 (Economic Geography)
- NEP-OPM-2011-06-25 (Open Economy Macroeconomic)
- NEP-SBM-2011-06-25 (Small Business Management)
- NEP-TID-2011-06-25 (Technology & Industrial Dynamics)
- NEP-URE-2011-06-25 (Urban & Real Estate Economics)
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