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Schumpeterian Creative Class Competition, Innovation Policy, and Regional Economic Growth

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  • Batabyal, Amitrajeet
  • Yoo, Seung Jick

Abstract

We focus on a region that is creative in the sense of Richard Florida. The creative class is broadly composed of existing and candidate entrepreneurs. The general question we analyze concerns the effects of Schumpeterian competition between existing and candidate entrepreneurs on economic growth and innovation policy in this region. We perform four specific tasks. First, when the flow rate of innovation function for the existing entrepreneurs is strictly concave, we delineate the circumstances in which competition between existing and candidate entrepreneurs leads to a unique balanced growth path (BGP) equilibrium. Second, we examine whether it is possible for the BGP equilibrium to involve different levels of R&D expenditures by the existing entrepreneurs. Third, we show how the BGP equilibrium is altered when the flow rate of innovation function for the existing entrepreneurs is constant. Finally, we study the impact that taxes and subsidies on R&D by existing and candidate entrepreneurs have on R&D expenditures and regional economic growth.

Suggested Citation

  • Batabyal, Amitrajeet & Yoo, Seung Jick, 2017. "Schumpeterian Creative Class Competition, Innovation Policy, and Regional Economic Growth," MPRA Paper 83891, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:83891
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    1. Todd Gabe & Richard Florida & Charlotta Mellander, 2012. "The Creative Class and the crisis," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(1), pages 37-53.
    2. Amitrajeet Batabyal & Peter Nijkamp, 2013. "The creative class, its preferences, and unbalanced growth in an urban economy," Journal of Evolutionary Economics, Springer, vol. 23(1), pages 189-209, January.
    3. Richard Florida, 2014. "The Creative Class and Economic Development," Economic Development Quarterly, , vol. 28(3), pages 196-205, August.
    4. 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.
    5. Acemoglu, Daron & Cao, Dan, 2015. "Innovation by entrants and incumbents," Journal of Economic Theory, Elsevier, vol. 157(C), pages 255-294.
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    9. Chen, Li-Yueh & Chen, Yu-Fen & Yang, Sheng-Yung, 2017. "Managerial incentives and R&D investments: The moderating effect of the directors’ and officers’ liability insurance," The North American Journal of Economics and Finance, Elsevier, vol. 39(C), pages 210-222.
    10. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    11. Orman, Cuneyt, 2015. "Organization of innovation and capital markets," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 94-114.
    12. Elliot Siemiatycki, 2013. "A Smooth Ride? From Industrial to Creative Urbanism in Oshawa, Ontario," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 37(5), pages 1766-1784, September.
    13. 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.
    14. William J. Baumol, 2013. "The Microtheory of Innovative Entrepreneurship," Journal of Economic Sociology, National Research University Higher School of Economics, vol. 14(3), pages 96-108.
    15. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2008. "Inside the black box of regional development: human capital, the creative class and tolerance," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 615-649, September.
    16. 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.
    17. Reza Oladi & Hamid Beladi, 2008. "Is Regionalism Viable? A Case for Global Free Trade," Review of International Economics, Wiley Blackwell, vol. 16(2), pages 293-300, May.
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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. Vita HAVRYLIUK & Andrii HROMYK & Ivan SEMENETS & Tetiana PYLYPIUK & Rostislav MOTSYK & Anna KOSTYAKOVA, 2021. "Digitalization Of Territorial And Economic Systems At The Regional Level," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 209-226, June.
    3. Wang, En-Ze & Lee, Chien-Chiang, 2022. "The impact of clean energy consumption on economic growth in China: Is environmental regulation a curse or a blessing?," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 39-58.
    4. Batabyal, Amitrajeet & Beladi, Hamid, 2021. "On the Existence of an Equilibrium in Models of Local Public Good Use by Cities to Attract the Creative Class," MPRA Paper 105196, University Library of Munich, Germany, revised 07 Jan 2021.
    5. Amitrajeet A. BATABYAL & Seung JICK YOO, 2018. "A Note On Schumpeterian Competition In The Creative Class And Innovation Policy," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(3), pages 119-125, December.
    6. Kasim Yusupov & Iuliia Toktamysheva & Asat Yangirov & Rustem Akhunov, 2019. "Economic Growth Strategy Based on the Dynamics of Gross Domestic Product," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(1), pages 151-163.

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    More about this item

    Keywords

    Creative Class; Creative Destruction; Economic Growth; Innovation Policy; R&D;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • 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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