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Regional economic disparities under the Solow model

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  • Marcus Gumpert

    (Health Insurance Physicians Unification Saxony)

Abstract

In previous analyses of regional underdevelopment, aspects such as technological progress, the implications of growth theory, depreciation (especially capital), capital input, and technology input have been completely ignored. Desmet and Ortίn analyze rational underdevelopment using a Ricardian model. This study investigates the underdevelopment of regions in the light of the Solow model. Two regions with two sectors are considered for the model. The regions are characterized by different technological equipment. The first region is industrial. The second region has an agricultural character. When a new technology is available, both regions can benefit under certain conditions. Financial transfers between regions equalize incomes. The security of transfer payments is positive; the increase in income levels without an increase in productivity is negative. The regions have different depreciation rates, factors, and technology endowments. Enlargement to a growth theoretical model framework (Solow model) should demonstrate the effects of an economy’s investments, constant depreciation rates, population growth, and technological progress. This will make it possible to see how the new influencing factors influence the utility of the two regions.

Suggested Citation

  • Marcus Gumpert, 2024. "Regional economic disparities under the Solow model," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(2), pages 1017-1037, April.
    • Handle: RePEc:spr:qualqt:v:58:y:2024:i:2:d:10.1007_s11135-019-00836-2
    DOI: 10.1007/s11135-019-00836-2
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Klaus Desmet, 2002. "A Simple Dynamic Model of Uneven Development and Overtaking," Economic Journal, Royal Economic Society, vol. 112(482), pages 894-918, October.
    3. Roberta Capello & Andrea Caragliu & Ugo Fratesi, 2018. "Compensation modes of border effects in cross‐border regions," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 759-785, September.
    4. Desmet, Klaus, 1999. "A simple dynamic model of uneven development and overtaking," UC3M Working papers. Economics 6130, Universidad Carlos III de Madrid. Departamento de Economía.
    5. Ugo Fratesi & Andrés Rodríguez-Pose, 2016. "The crisis and regional employment in Europe: what role for sheltered economies?," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 9(1), pages 33-57.
    6. Elise Brezis & Daniel Tsiddon, 1998. "Economic growth, leadership and capital flows: the leapfrogging effect," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(3), pages 261-277.
    7. Marcus Gumpert, 2016. "Rational underdevelopment: regional economic disparities under the Heckscher-Ohlin Theorem," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 89-111, January.
    8. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-1219, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Regional economic disparities; Rational underdevelopment; Factor mobility; Interregional transfers; Regional policy; Uneven development; Solow model;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R19 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Other
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F19 - International Economics - - Trade - - - Other

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