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Innovation, Decentralization, and Planning in a Multi-Region Model of Schumpeterian Economic Growth

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  • Amitrajeet Batabyal

    ()

  • Peter Nijkamp

    ()

Abstract

We study innovation and the resulting Schumpeterian economic growth that this innovation gives rise to in a model with N heterogeneous regions. For each region i where i = 1,…,N, our analysis leads to six findings. First, we define the balanced growth path (BGP) allocations and the equilibrium of interest. Second, we stipulate the form of the innovation possibilities frontier that is consistent with balanced economic growth. Third, we derive the growth rate of the ith region in the decentralized equilibrium. Fourth, we solve the social planner’s problem and derive the Pareto optimal growth rate in the ith region. Fifth, we compare the two preceding growth rates and then discuss the circumstances in which there is either too much or too little innovation in (i) the ith region, (ii) an aggregate economy of N>2 regions and (iii) an aggregate economy of N=2 regions. Sixth, we briefly discuss interregional trade and its effects in an aggregate economy of N=2 regions. Finally, we conclude and then offer suggestions for extending the research described here. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • 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.
  • Handle: RePEc:kap:netspa:v:14:y:2014:i:3:p:605-628
    DOI: 10.1007/s11067-014-9258-2
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Batabyal, Amitrajeet, 2018. "Creative Class Competition and Innovation in the Absence of Patent Protection," MPRA Paper 89604, University Library of Munich, Germany, revised 17 Apr 2018.
    2. 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.
    3. Dušan Marković, 2018. "RETRACTED ARTICLE: Appraisal of Science and Economic Factors on Total Number of Granted Patents," Networks and Spatial Economics, Springer, vol. 18(4), pages 1019-1026, December.
    4. 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.
    5. 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.
    6. Hmaed Najafi Alamdarlo & Fariba Riyahi & Mohamad Hasan Vakilpoor, 2019. "Wheat Self-Sufficiency, Water Restriction and Virtual Water Trade in Iran," Networks and Spatial Economics, Springer, vol. 19(2), pages 503-520, June.

    More about this item

    Keywords

    Human capital; Innovation; Multi-region economy; Schumpeterian economic growth; R11; J24; O31;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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