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A model of trade between creative regions in the presence of sector specific learning by doing

  • Amitrajeet Batabyal

    ()

  • Hamid Beladi

    ()

We analyze a model of trade between two heterogeneous regions that are creative in the sense of Richard Florida. One region is larger than the other region in terms of its endowment of creative capital. Each region produces a single final good with inputs 1 and 2 that are traded. There is learning by doing only in the sector producing input 1. Our primary objective is to study the impacts of this sector specific learning by doing and trade on the economies of the two regions under consideration. Our analysis leads to two salient results. First, when a specific condition holds, the smaller region specializes completely in the production of input 1 but there is incomplete specialization in the larger region. In particular, at time t=0, not all creative capital in the larger region is employed in sector 2 and there is some learning by doing in this larger region as well. Second, in the long run, the smaller region continues to specialize completely in the production of input 1 but the larger region specializes completely in the production of input 2. Copyright Springer-Verlag Berlin Heidelberg 2014

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File URL: http://hdl.handle.net/10.1007/s00191-013-0332-6
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Article provided by Springer in its journal Journal of Evolutionary Economics.

Volume (Year): 24 (2014)
Issue (Month): 3 (July)
Pages: 573-585

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Handle: RePEc:spr:joevec:v:24:y:2014:i:3:p:573-585
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  1. Emanuela Marrocu & Raffaele Paci, 2012. "Education or Creativity: What Matters Most for Economic Performance?," Economic Geography, Clark University, vol. 88(4), pages 369-401, October.
  2. Philippe Aghion & Diego Comin & Peter Howitt & Isabel Tecu, 2009. "When Does Domestic Saving Matter for Economic Growth?," Harvard Business School Working Papers 09-080, Harvard Business School.
  3. Amitrajeet Batabyal & Peter Nijkamp, 2010. "Richard Florida’s creative capital in a trading regional economy: a theoretical investigation," The Annals of Regional Science, Springer, vol. 44(2), pages 241-250, April.
  4. Ron A. Boschma & Michael Fritsch, 2009. "Creative Class and Regional Growth: Empirical Evidence from Seven European Countries," Economic Geography, Clark University, vol. 85(4), pages 391-423, October.
  5. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  6. Gabe, Todd & Florida, Richard & Mellander, Charlotta, 2012. "The Creative Class And The Crisis," Working Paper Series in Economics and Institutions of Innovation 272, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  7. Mary Donegan & Nichola Lowe, 2008. "Inequality in the Creative City: Is There Still a Place for “Old-Fashioned†Institutions?," Economic Development Quarterly, , vol. 22(1), pages 46-62, February.
  8. Roberta Comunian, 2011. "Rethinking the Creative City," Urban Studies, Urban Studies Journal Limited, vol. 48(6), pages 1157-1179, May.
  9. Florida, Richard & Mellander, Charlotta & Stolarick, Kevin, 2007. "Inside the Black Box of Regional Development - human capital, the creative class and tolerance," Working Paper Series in Economics and Institutions of Innovation 88, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  10. David Mcgranahan & Timothy Wojan, 2007. "Recasting the Creative Class to Examine Growth Processes in Rural and Urban Counties," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 197-216.
  11. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
  12. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 9780262012638, August.
  13. Nathan, Max, 2007. "The Wrong Stuff? Creative Class Theory and Economic Performance in UK Cities," MPRA Paper 29486, University Library of Munich, Germany.
  14. Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
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