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

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  • Pozzolo, Alberto Franco

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Abstract

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
Handle: RePEc:mol:ecsdps:esdp03008
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Keywords: endogenous growth; local spillovers; regional location.;

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Find related papers by JEL classification:
  • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
  • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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Cited by:

  1. Gambacorta, L., 1999. "What Is the Optimal Institutional Arrangement for a Monetary Union?," Papers 356, Banca Italia - Servizio di Studi.

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