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Research and Development, Regional Spillovers and the Location of Economic Activities

  • Pozzolo, Alberto Franco

    ()

I present an endogenous growth model that studies the effects of local inter-industry and intra-industry knowledge spillovers in R&D on the allocation of economic activities between two regions. The equilibrium is the result of a tension between a centripetal force, the cost of transporting goods from one region to the other, and a centrifugal force, the cost increase associated with life in a more crowded area. The presence of local knowledge spillovers, which determines the concentration of the R&D activities within one region, also introduces a further centripetal force that makes impossible a symmetric allocation of the economic activities. The concentration of R&D fosters the equilibrium rate of growth of the economy with respect to the case of no-integration, by increasing the positive effect of local knowledge spillovers. Contrary to the findings of the majority of models in the new economic geography literature, within this framework a reduction in the transport costs may be associated with a more even spatial location of economic activities.

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Paper provided by University of Molise, Dept. EGSeI in its series Economics & Statistics Discussion Papers with number esdp03008.

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Length: 28 pages
Date of creation: 18 Jul 2003
Date of revision:
Handle: RePEc:mol:ecsdps:esdp03008
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