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The dynamics of knowledge diversity and economic growth

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  • Berliant, Marcus
  • Fujita, Masahisa

Abstract

How is long run economic growth related to the diversity of knowledge? We formulate and study a microeconomic model of knowledge creation, through the interactions among a group of heterogeneous R & D workers, embedded in a growth model to address this question. Income to these workers accrues as patent income, whereas transmission of newly created knowledge to all such workers occurs due to public transmission of patent information. The model features myopic R & D workers in a pure externality model of interaction. Surprisingly, in the general case for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. Equilibrium paths are found analytically. Long run economic growth is positively related to both the effectiveness of pairwise R & D worker interaction and to the effectiveness of public knowledge transmission.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9514.

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Date of creation: 09 Jul 2008
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Handle: RePEc:pra:mprapa:9514

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Keywords: knowledge creation; knowledge externalities; microfoundations of endogenous growth; knowledge diversity and growth;

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Citations

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Cited by:
  1. Berliant, Marcus & Yu, Chia-Ming, 2010. "Locational signaling and agglomeration," MPRA Paper 24155, University Library of Munich, Germany.
  2. Berliant, Marcus & Fujita, Masahisa, 2011. "Culture and diversity in knowledge creation," MPRA Paper 27997, University Library of Munich, Germany.
  3. Parrotta, Pierpaolo & Pozzoli, Dario & Pytlikova, Mariola, 2012. "The Nexus between Labor Diversity and Firm's Innovation," IZA Discussion Papers 6972, Institute for the Study of Labor (IZA).
  4. Ryusuke Ihara, 2011. "Agglomeration with the pros and cons of labor heterogeneity," ERSA conference papers ersa11p528, European Regional Science Association.
  5. Max Nathan, 2013. "Top Team Demographics, Innovation And Business Performance: Findings From English Firms And Cities, 2008-9," ERSA conference papers ersa13p69, European Regional Science Association.
  6. Max Nathan, 2011. "Ethnic Inventors, Diversity and Innovation in the UK: Evidence from Patents Microdata," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0092, Spatial Economics Research Centre, LSE.
  7. Tavassoli, Sam & Carbonara, Nunzia, 2013. "The Role of Knowledge Variety and Intensity for Regional Innovative Capability," CITR Working Paper Series, Center for Innovation and Technology Research, Blekinge Institute of Technology 2013/01, Center for Innovation and Technology Research, Blekinge Institute of Technology.
  8. Neil Lee & Max Nathan, 2011. "Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0069, Spatial Economics Research Centre, LSE.
  9. Sam Tavassoli & Nunzia Carbonara, 2013. "The Role of Knowledge Variety and Intensity for Regional Innovative Capability - Swedish evidence," Papers in Evolutionary Economic Geography (PEEG), Utrecht University, Section of Economic Geography 1317, Utrecht University, Section of Economic Geography, revised Oct 2013.
  10. Florian Noseleit & Rene Söllner, 2011. "Diversity of human capital and regional growth," ERSA conference papers ersa10p245, European Regional Science Association.

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