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On research and development in a model of Schumpeterian economic growth in a creative region


  • Batabyal, Amitrajeet A.
  • Yoo, Seung Jick


We analyze the nature of research and development (R&D) that leads to Schumpeterian economic growth in a region that is creative in the sense of Richard Florida. The engine of economic growth in our creative region is process innovations that lead to quality improvements in the machines that are used to produce a final consumption good. We accomplish two main tasks. First, we show that in the so called balanced growth path (BGP) equilibrium, growth is unbalanced because R&D takes place only on the machine line with the highest quality. Second, we show how a policymaker can alter the basic model so that the resulting equilibrium has balanced growth in the sense that there is R&D across all the different machine lines.

Suggested Citation

  • Batabyal, Amitrajeet A. & Yoo, Seung Jick, 2017. "On research and development in a model of Schumpeterian economic growth in a creative region," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 69-74.
  • Handle: RePEc:eee:tefoso:v:115:y:2017:i:c:p:69-74
    DOI: 10.1016/j.techfore.2016.09.020

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    References listed on IDEAS

    1. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2008. "Inside the black box of regional development: human capital, the creative class and tolerance," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 615-649, September.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    4. Amitrajeet A. Batabyal & Peter Nijkamp, 2012. "Retraction of “A Schumpeterian Model of Entrepreneurship, Innovation, and Regional Economic Growthâ€," International Regional Science Review, , vol. 35(4), pages 464-486, October.
    5. Amitrajeet Batabyal & Peter Nijkamp, 2014. "Innovation, Decentralization, and Planning in a Multi-Region Model of Schumpeterian Economic Growth," Networks and Spatial Economics, Springer, vol. 14(3), pages 605-628, December.
    6. David Bieri, 2010. "Booming Bohemia? Evidence from the US High-Technology Industry," Industry and Innovation, Taylor & Francis Journals, vol. 17(1), pages 23-48.
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    8. Gerard Marlet & Clemens van Woerkens, 2007. "The Dutch Creative Class and How it Fosters Urban Employment Growth," Urban Studies, Urban Studies Journal Limited, vol. 44(13), pages 2605-2626, December.
    9. Amitrajeet A. Batabyal & Peter Nijkamp, 2012. "A Schumpeterian Model of Entrepreneurship, Innovation, and Regional Economic Growth," International Regional Science Review, , vol. 35(3), pages 339-361, July.
    10. William J. Baumol, 2013. "The Microtheory of Innovative Entrepreneurship," Journal of Economic Sociology, National Research University Higher School of Economics, vol. 14(3), pages 96-108.
    11. Amitrajeet A. Batabyal & Peter Nijkamp, 2013. "Human capital use, innovation, patent protection, and economic growth in multiple regions," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(2), pages 113-126, March.
    12. Francesco Quatraro, 2009. "Diffusion of Regional Innovation Capabilities: Evidence from Italian Patent Data," Regional Studies, Taylor & Francis Journals, vol. 43(10), pages 1333-1348, December.
    13. Edward J Malecki, 2007. "Cities and Regions Competing in the Global Economy: Knowledge and Local Development Policies," Environment and Planning C, , vol. 25(5), pages 638-654, October.
    14. Hamid Beladi & Reza Oladi, 2014. "Technical Progress, Urban Unemployment and Heterogeneous Firms," Economics and Politics, Wiley Blackwell, vol. 26(3), pages 519-529, November.
    15. Batabyal, Amitrajeet & Beladi, Hamid, 2014. "The equilibrium allocation of creative capital to R&D in a dynamic creative region," MPRA Paper 72325, University Library of Munich, Germany.
    16. Batabyal, Amitrajeet A. & Beladi, Hamid, 2016. "The effects of probabilistic innovations on Schumpeterian economic growth in a creative region," Economic Modelling, Elsevier, vol. 53(C), pages 224-230.
    17. Elliot Siemiatycki, 2013. "A Smooth Ride? From Industrial to Creative Urbanism in Oshawa, Ontario," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 37(5), pages 1766-1784, September.
    18. Carillo, Maria Rosaria & Papagni, Erasmo, 2014. "“Little Science” and “Big Science”: The institution of “Open Science” as a cause of scientific and economic inequalities among countries," Economic Modelling, Elsevier, vol. 43(C), pages 42-56.
    19. Hart Hodges & Stein Østbye, 2010. "Is small firm gardening good for local economic growth?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(8), pages 809-813.
    20. Edward J Malecki, 2007. "Cities and regions competing in the global economy: knowledge and local development policies," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 25(5), pages 638-654, October.
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    Cited by:

    1. repec:eee:reveco:v:55:y:2018:i:c:p:86-97 is not listed on IDEAS
    2. Batabyal, Amitrajeet A. & Yoo, Seung Jick, 2018. "Schumpeterian creative class competition, innovation policy, and regional economic growth," International Review of Economics & Finance, Elsevier, vol. 55(C), pages 86-97.

    More about this item


    Creative capital; Creative region; Innovation; R&D; Schumpeterian economic growth;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models


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