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The Core–Periphery Model and Endogenous Growth: Stabilizing and Destabilizing Integration

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  • Richard E Baldwin
  • Rikard Forslid

Abstract

We present a model where long‐run growth and industrial location are jointlyendogenous by introducing Romerian product innovation growth into Krugman'score–periphery model. We focus on stability, showing that growth is apowerful centripetal force, but that knowledge spillovers are a powerfulcentrifugal force. Integration policies that lower the cost of tradingideas are shown to encourage dispersion of economic activity while thosethat lower the cost of trading goods encourage agglomeration. Agglomerationis shown to be favourable to growth in both regions. The pro‐growth effectsmitigate the periphery's static welfare loss from agglomeration.

Suggested Citation

  • Richard E Baldwin & Rikard Forslid, 2000. "The Core–Periphery Model and Endogenous Growth: Stabilizing and Destabilizing Integration," Economica, London School of Economics and Political Science, vol. 67(267), pages 307-324, August.
    • Handle: RePEc:bla:econom:v:67:y:2000:i:267:p:307-324
    DOI: 10.1111/1468-0335.00211
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    Cited by:

    1. Colin Davis & Ken‐ichi Hashimoto, 2025. "R&D Subsidies, Innovation Location, and Productivity Growth," Review of International Economics, Wiley Blackwell, vol. 33(4), pages 911-920, September.
    2. Alexandru HAIDUC & Samuel NICOARĂ & Olimpia NEAGU, 2024. "Transport Infrastructure Development And Economic Growth In The European Union," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 33(1), pages 59-66, July.
    3. Ian W. McLean & Alan M. Taylor, 2001. "Australian Growth: A California Perspective," NBER Working Papers 8408, National Bureau of Economic Research, Inc.
    4. Gao, Ting, 2007. "Trade costs, international production shifting, and growth," European Economic Review, Elsevier, vol. 51(2), pages 317-335, February.
    5. Marta Aloi & Joanna Poyago-Theotoky & Frédéric Tournemaine, 2022. "The Geography of Knowledge and R&D-led Growth [Real effects ofacademic research: comment]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1149-1190.
    6. Stefano Magrini & Alessandro Spiganti, 2024. "A tale of two cities: Communication, innovation, and divergence," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 390-413, January.
    7. Miguel Angel Quiroga Suazo, 2002. "Agglomeration economies: influence on the distribution of foreign investment in Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 29(1 Year 20), pages 139-163, June.
    8. Keller, Wolfgang, 2001. "The Geography and Channels of Diffusion at the World's Technology Frontier," Discussion Paper Series 26140, Hamburg Institute of International Economics.
    9. Steven Bond‐Smith, 2022. "Discretely innovating: The effect of limited market contestability on innovation and growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 301-327, July.
    10. Commander, Simon & Kangasniemi, Mari & Winters, L. Alan, 2003. "The Brain Drain: Curse or Boon?," IZA Discussion Papers 809, IZA Network @ LISER.
    11. Christ, Julian P., 2009. "New Economic Geography reloaded: Localized knowledge spillovers and the geography of innovation," FZID Discussion Papers 01-2009, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    12. Zhang, Yijia & Cheng, Lu, 2023. "The role of transport infrastructure in economic growth: Empirical evidence in the UK," Transport Policy, Elsevier, vol. 133(C), pages 223-233.
    13. Baldwin, Richard E. & Martin, Philippe, 2004. "Agglomeration and regional growth," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 60, pages 2671-2711, Elsevier.
    14. Michael Roos, 2003. "Internationale Integration und die Neue Ökonomische Geographie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(1), pages 107-121, February.
    15. Alberto Franco Pozzolo, 2004. "Endogenous growth in open economies: a surveys," Temi di discussione (Economic working papers) 527, Bank of Italy, Economic Research and International Relations Area.
    16. Anna Iara & Iulia Traistaru, 2004. "Integration, Regional Specialization and Growth Differentials in EU Acceding Countries: Evidence from Hungary," ERSA conference papers ersa04p298, European Regional Science Association.
    17. Rita De Siano & Marcella D'Uva, 2010. "Specialization and growth in Italy: what spatial econometric analysis tells us," Discussion Papers 1_2010, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    18. Christophe Heyndrickx & Natalia Tourdyeva & Victoria Alexeeva-Talebi, 2011. "The SUSTRUS model: a CGE model on regional level for sustainability policies in Russia," EcoMod2011 3144, EcoMod.
    19. Yilin Chen, 2024. "Regional decline and structural changes in Northeast China: an exploratory space–time approach," Asia-Pacific Journal of Regional Science, Springer, vol. 8(2), pages 397-427, June.
    20. Ács J., Zoltán, 2024. "Jaffe-Feldman-Varga: a tudás átterjedésének keresése [Jaffe-Feldman-Varga: the search for knowledge spillovers]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1123-1140.
    21. Zielińska-Głębocka, Anna, 2001. "Wzrost gospodarczy w Unii Europejskiej," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2001(7-8), July.
    22. Yanxin Hu & Xiang Li, 2026. "The effects of industrial agglomeration on ecological efficiency in China: evidence from manufacturing industry panel data," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 28(4), pages 10185-10218, April.
    23. Sidorov Aleksandr, 2011. "The Impact of Exogenous Asymmetry on Trade and Agglomeration in Core-Periphery Model," EERC Working Paper Series 11/05e, EERC Research Network, Russia and CIS.
    24. Berliant, Marcus & Wang, Ping, 2008. "Urban growth and subcenter formation: A trolley ride from the Staples Center to Disneyland and the Rose Bowl," Journal of Urban Economics, Elsevier, vol. 63(2), pages 679-693, March.
    25. Luca, Spinesi, 2005. "Vertical and Horizontal Innovation : Effects of Globalization and Migration on Inequality, Growth and Human Capital Accumulation," Discussion Papers (ECON - Département des Sciences Economiques) 2005028, Université catholique de Louvain, Département des Sciences Economiques.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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