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Knowledge spillovers, location of industry, and endogenous growth

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  • Kyoko Hirose

    ()
    (Graduate School of Economics, Osaka University)

  • Kazuhiro Yamamoto

    ()
    (Graduate School of Economics, Osaka University)

Abstract

A Grossman-Helpman-Romer-type endogenous-growth model is developed in this study. This model has two countries in which there are knowledge spillovers that are partially local. Owing to these spillovers, innovation cost in a particular country decreases as the number of firms locating in both that country and the other country increases. If international knowledge spillovers are symmetric, innovation cost is lower in the country that has the larger market. However, if a small-market country can absorb the international knowledge spillovers better than a large-market country, the innovation cost may be lower in the small-market country. When the innovation cost is lower in the country that has a large market, the growth rate increases with agglomeration, which is generated by a reduction in the transportation costs. However, when the innovation cost is lower in the country that has a small market, the growth rate decreases with the reduction in the transportation costs.

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Bibliographic Info

Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 05-15.

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Length: 30 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:osk:wpaper:0515

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Keywords: knowledge spillovers; growth rate; transportation costs; market scale;

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  1. Martin, Philippe & I.P. Ottaviano, Gianmarco, 1999. "Growing locations: Industry location in a model of endogenous growth," European Economic Review, Elsevier, vol. 43(2), pages 281-302, February.
  2. Baldwin, Richard E. & Martin, Philippe & Ottaviano, Gianmarco I.P., 1998. "Global Income Divergence, Trade and Industrialisation: The Geography of Growth Take-Offs," Working Paper Series 496, Research Institute of Industrial Economics.
  3. Eaton, Jonathan & Kortum, Samuel, 1996. "Trade in ideas Patenting and productivity in the OECD," Journal of International Economics, Elsevier, vol. 40(3-4), pages 251-278, May.
  4. Baldwin, Richard E., 1999. "Agglomeration and endogenous capital," European Economic Review, Elsevier, vol. 43(2), pages 253-280, February.
  5. Sala-i-martin, X. & Barro, R.J., 1995. "technological Diffusion, Convergence and Growth," Papers 735, Yale - Economic Growth Center.
  6. Yamamoto, Kazuhiro, 2003. "Agglomeration and growth with innovation in the intermediate goods sector," Regional Science and Urban Economics, Elsevier, vol. 33(3), pages 335-360, May.
  7. Paul Romer, 1991. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  8. Martin, Philippe, 1999. "Public policies, regional inequalities and growth," Journal of Public Economics, Elsevier, vol. 73(1), pages 85-105, July.
  9. Masahisa Fujita & Jacques-François Thisse, 2003. "Does Geographical Agglomeration Foster Economic Growth? And Who Gains and Loses from It?," The Japanese Economic Review, Japanese Economic Association, vol. 54(2), pages 121-145.
  10. repec:fth:iniesr:496 is not listed on IDEAS
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Cited by:
  1. Rafael González-Val & Fernando Pueyo, 2010. "First nature vs. second nature causes: industry location and growth in the presence of an open-access renewable resource," Working Papers 2010/39, Institut d'Economia de Barcelona (IEB).
  2. González-Val, Rafael & Lanaspa, Luis & Pueyo, Fernando, 2008. "Trade policies, concentration, growth and welfare," MPRA Paper 9730, University Library of Munich, Germany.
  3. Akinori Tanaka & Kazuhiro Yamamoto, 2011. "Trade costs, wage difference, and endogenous growth," Discussion Papers in Economics and Business 11-16, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  4. Steven Bond-Smith, 2012. "A Regional Model of Endogenous Growth with Creative Destruction," Working Papers in Economics 12/02, University of Waikato, Department of Economics.
  5. Karima Kourtit & Peter Nijkamp, 2013. "In Search of Creative Champions in High-Tech Spaces," Tinbergen Institute Discussion Papers 13-193/VIII, Tinbergen Institute.
  6. Arauzo Carod, Josep Maria & Faggian, Alessandra & Mañé Vernet, Ferran, 2010. "Internal and External Determinants of Radical and incremental Innovation in SMEs: the case of Catalonia," Working Papers 2072/179605, Universitat Rovira i Virgili, Department of Economics.

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