IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/93486.html

The Magnification of a Lagging Region's Initial Economic Disadvantages on the Balanced Growth Path

Author

Listed:
  • Batabyal, Amitrajeet
  • Nijkamp, Peter

Abstract

We analyze aspects of long run economic growth in stylized lagging and leading regions. Both regions use physical capital, research and development (R&D), and knowledgeable workers to produce a final consumption good. The lagging region faces two key economic disadvantages. Specifically, the constant fractions of the output of the final consumption good that are saved to enhance the stocks of physical capital and R&D are assumed to be twice as large in the leading region as they are in the lagging region. In this scenario, we perform three tasks. First, we determine the ratio of the balanced growth path (BGP) value of output per knowledgeable worker in the leading region to its value in the lagging region. Second, we ascertain the ratio of the BGP value of R&D per knowledgeable worker in the leading region to its value in the lagging region. Finally, we show the extent to which the lagging region’s initial economic disadvantages are magnified on the BGP and then discuss some policy implications.

Suggested Citation

  • Batabyal, Amitrajeet & Nijkamp, Peter, 2019. "The Magnification of a Lagging Region's Initial Economic Disadvantages on the Balanced Growth Path," MPRA Paper 93486, University Library of Munich, Germany, revised 09 Mar 2019.
    • Handle: RePEc:pra:mprapa:93486
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/93486/1/MPRA_paper_93486.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Amit Batabyal & Peter Nijkamp, 2014. "Technology, Learning, and Long Run Economic Growth in Leading and Lagging Regions," ERSA conference papers ersa14p893, European Regional Science Association.
    2. Youngjin Woo & Euijune Kim & Jaewon Lim, 2017. "The Impact of Education and R&D Investment on Regional Economic Growth," Sustainability, MDPI, vol. 9(5), pages 1-18, April.
    3. Boltho, Andrea & Carlin, Wendy & Scaramozzino, Pasquale, 2018. "Why East Germany did not become a new Mezzogiorno," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 308-325.
    4. Amitrajeet A. BATABYAL, 2018. "Note On Local Public Good Induced Spillovers Between A Leading And A Lagging Region," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 11-16, July.
    5. Desmet, Klaus, 2000. "A perfect foresight model of regional development and skill specialization," Regional Science and Urban Economics, Elsevier, vol. 30(2), pages 221-242, March.
    6. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1033-1082, Elsevier.
    7. Dawid, H. & Harting, P. & Neugart, M., 2014. "Economic convergence: Policy implications from a heterogeneous agent model," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 54-80.
    8. Bronwyn H. Hall & Nathan Rosenberg (ed.), 2010. "Handbook of the Economics of Innovation," Handbook of the Economics of Innovation, Elsevier, edition 1, volume 1, number 1.
    9. Gudrun Kochendorfer-Lucius & Boris Pleskovic, 2009. "Berlin Workshop Series 2009 : Spatial Disparities and Development Policy," World Bank Publications - Books, The World Bank Group, number 2650, April.
    10. Batabyal, Amitrajeet & Nijkamp, Peter, 2014. "Some properties of the technology gap between leading and lagging regions," MPRA Paper 71596, University Library of Munich, Germany.
    11. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    12. Reza Oladi & John Gilbert, 2011. "Monopolistic Competition and North–South Trade," Review of International Economics, Wiley Blackwell, vol. 19(3), pages 459-474, August.
    13. Timo Mitze & Björn Alecke & Janina Reinkowski & Gerhard Untiedt, 2015. "Linking collaborative R&D strategies with the research and innovation performance of SMEs in peripheral regions: Do spatial and organizational choices make a difference?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 555-596, December.
    14. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    15. Hulya Ulku, 2004. "R&D, Innovation, and Economic Growth: An Empirical Analysis," IMF Working Papers 2004/185, International Monetary Fund.
    16. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    17. Batabyal, Amitrajeet A. & Beladi, Hamid, 2015. "Knowledge goods, ordinary goods, and the effects of trade between leading and lagging regions," Research Policy, Elsevier, vol. 44(8), pages 1537-1542.
    18. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2013. "Growth effects of regional policy in Germany: results from a spatially augmented multiplicative interaction model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(2), pages 535-554, April.
    19. Nocco, Antonella, 2005. "The rise and fall of regional inequalities with technological differences and knowledge spillovers," Regional Science and Urban Economics, Elsevier, vol. 35(5), pages 542-569, September.
    20. Eleonora CUTRINI & Enzo VALENTINI, 2017. "Regional Strategies For Dealing With Structural Change," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(1), pages 107-117, June.
    21. Amitrajeet A. Batabyal & Peter Nijkamp, 2019. "Creative capital, information and communication technologies, and economic growth in smart cities," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(2), pages 142-155, February.
    22. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-1085, December.
    23. Soraya Goga & Thomas Farole & Marcel Ionescu-Heroiu, 2018. "Rethinking Lagging Regions," World Bank Publications - Reports 29823, The World Bank Group.
    24. Klaus Desmet & Ignacio Ortuño Ortín, 2007. "Rational Underdevelopment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(1), pages 1-24, March.
    25. Giannetti, Mariassunta, 2002. "The effects of integration on regional disparities: Convergence, divergence or both?," European Economic Review, Elsevier, vol. 46(3), pages 539-567, March.
    26. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "Heterogeneity and the Provision of a Public Good in Leading and Lagging Regions," MPRA Paper 96812, University Library of Munich, Germany, revised 15 Sep 2019.
    2. Batabyal, Amitrajeet & Kourtit, Karima, 2021. "An Analysis of Resilience in Complex Socioeconomic Systems," MPRA Paper 105197, University Library of Munich, Germany, revised 08 Jan 2021.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adriana Di Liberto, 2007. "Convergence and Divergence in Neoclassical Growth Models with Human Capital," Economia politica, Società editrice il Mulino, issue 2, pages 289-322.
    2. Klenow, Peter J. & Rodriguez-Clare, Andres, 2005. "Externalities and Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 11, pages 817-861, Elsevier.
    3. Andrea Bonaccorsi & Daniele Biancardi & Mabel Sanchez Barrioluengo & Federico Biagi, 2019. "Study on Higher Education Institutions and Local Development," JRC Research Reports JRC117272, Joint Research Centre.
    4. Batabyal, Amitrajeet & Yoo, Seung Jick, 2019. "Heterogeneity and the Provision of a Public Good in Leading and Lagging Regions," MPRA Paper 96812, University Library of Munich, Germany, revised 15 Sep 2019.
    5. Ejike Udeogu & Shampa Roy-Mukherjee & Uzochukwu Amakom, 2021. "Does Increasing Product Complexity and Diversity Cause Economic Growth in the Long-Run? A GMM Panel VAR Evidence," SAGE Open, , vol. 11(3), pages 21582440211, August.
    6. Bayraktar-Sağlam, Bahar & Yetkiner, Hakan, 2014. "A Romerian contribution to the empirics of economic growth," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 257-272.
    7. Pop Silaghi, Monica Ioana & Alexa, Diana & Jude, Cristina & Litan, Cristian, 2014. "Do business and public sector research and development expenditures contribute to economic growth in Central and Eastern European Countries? A dynamic panel estimation," Economic Modelling, Elsevier, vol. 36(C), pages 108-119.
    8. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    9. Amitrajeet A. Batabyal & Hamid Beladi, 2019. "Preference matching, income, and population distribution in urban and adjacent rural regions," Papers in Regional Science, Wiley Blackwell, vol. 98(5), pages 2201-2208, October.
    10. ?gel de la Fuente, "undated". "Convergence Across Countries And Regions: Theory And Empirics," UFAE and IAE Working Papers 447.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    11. Amitrajeet A. Batabyal & Peter Nijkamp, 2020. "Workplace choice, commuting costs, and wage taxation in urban and adjacent rural regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(3), pages 775-786, December.
    12. Iancu, Aurel, 2009. "Real Economic Convergence," Working Papers of National Institute for Economic Research 090104, Institutul National de Cercetari Economice (INCE).
    13. Amit Batabyal & Peter Nijkamp, 2014. "Technology, Learning, and Long Run Economic Growth in Leading and Lagging Regions," ERSA conference papers ersa14p893, European Regional Science Association.
    14. Amitrajeet A. Batabyal & Hamid Beladi, 2021. "Interregional demand for workers and the effects of labour income taxation," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(3), pages 1042-1050, June.
    15. Katherine Wynn & Mingji Liu & Jasmine Cohen, 2022. "Quantifying the economy‐wide returns to innovation for Australia," Australian Economic Papers, Wiley Blackwell, vol. 61(3), pages 591-614, September.
    16. Afonso, Oscar, 2013. "Diffusion and directed technological knowledge, human capital and wages," Economic Modelling, Elsevier, vol. 31(C), pages 370-382.
    17. Sasso, Simone & Ritzen, Jo, 2016. "Sectoral Cognitive Skills, R&D, and Productivity: A Cross-Country Cross-Sector Analysis," IZA Discussion Papers 10457, Institute of Labor Economics (IZA).
    18. Harald Badinger & Gabriele Tondl, 2003. "Trade, Human Capital and Innovation: The Engines of European Regional Growth in the 1990s," Advances in Spatial Science, in: Bernard Fingleton (ed.), European Regional Growth, chapter 7, pages 215-239, Springer.
    19. Van Elk, Roel & Verspagen, Bart & Ter Weel, Bas & Van der Wiel, Karen & Wouterse, Bram, 2015. "A macroeconomic analysis of the returns to public R&D investments," MERIT Working Papers 2015-042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    20. Gioldasis, Georgios & Musolesi, Antonio & Simioni, Michel, 2023. "Interactive R&D spillovers: An estimation strategy based on forecasting-driven model selection," International Journal of Forecasting, Elsevier, vol. 39(1), pages 144-169.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:93486. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.