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The dynamics of knowledge diversity and economic growth

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  • Berliant, Marcus
  • Fujita, Masahisa

Abstract

How is long run economic growth related to the diversity of knowledge? We formulate and study a microeconomic model of knowledge creation, through the interactions among a group of heterogeneous R & D workers, embedded in a growth model to address this question. Income to these workers accrues as patent income, whereas transmission of newly created knowledge to all such workers occurs due to public transmission of patent information. The model features myopic R & D workers in a pure externality model of interaction. Surprisingly, in the general case for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. Equilibrium paths are found analytically. Long run economic growth is positively related to both the effectiveness of pairwise R & D worker interaction and to the effectiveness of public knowledge transmission.

Suggested Citation

  • Berliant, Marcus & Fujita, Masahisa, 2008. "The dynamics of knowledge diversity and economic growth," MPRA Paper 9514, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:9514
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    References listed on IDEAS

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    Cited by:

    1. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2014. "The nexus between labor diversity and firm’s innovation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 303-364, April.
    2. Marcus Berliant & Tomoya Mori, 2017. "Beyond urban form: How Masahisa Fujita shapes us," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(1), pages 5-28, March.
    3. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2014. "The nexus between labor diversity and firm’s innovation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 303-364, April.
    4. Sam Tavassoli & Nunzia Carbonara, 2014. "The role of knowledge variety and intensity for regional innovation," Small Business Economics, Springer, vol. 43(2), pages 493-509, August.
    5. Ruben Gaetani & Enrico Berkes, 2015. "The Geography of Unconventional Innovation," 2015 Meeting Papers 896, Society for Economic Dynamics.
    6. Max Nathan, 2011. "Ethnic Inventors, Diversity and Innovation in the UK: Evidence from Patents Microdata," SERC Discussion Papers 0092, Spatial Economics Research Centre, LSE.
    7. Marcus Berliant & Chia-Ming Yu, 2015. "Locational Signaling And Agglomeration," Journal of Regional Science, Wiley Blackwell, vol. 55(5), pages 757-773, November.
    8. Berliant, Marcus & Fujita, Masahisa, 2012. "Culture and diversity in knowledge creation," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 648-662.
    9. Norasingh, Xaysomphet & Machikita, Tomohiro & Ueki, Yasushi, 2015. "South-South technology transfer to Laos through face-to-face contacts," Journal of Business Research, Elsevier, vol. 68(7), pages 1420-1425.
    10. Max Nathan & Neil Lee, 2013. "Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London," Economic Geography, Clark University, vol. 89(4), pages 367-394, October.
    11. Neil Lee & Max Nathan, 2011. "Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms," SERC Discussion Papers 0069, Spatial Economics Research Centre, LSE.
    12. Tadashi Yagi, 2014. "Knowledge Creation by Consumers and Optimal Strategies of Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 5(3), pages 585-596, September.
    13. Max Nathan, 2013. "Top Team Demographics, Innovation and Business Performance: Findings from English Firms and Cities 2008-9," SERC Discussion Papers 0129, Spatial Economics Research Centre, LSE.
    14. Todo, Yasuyuki & Matous, Petr & Inoue, Hiroyasu, 2016. "The strength of long ties and the weakness of strong ties: Knowledge diffusion through supply chain networks," Research Policy, Elsevier, vol. 45(9), pages 1890-1906.
    15. Nathan, Max, 2013. "Top team demographics, innovation and business performance: findings from English firms and cities 2008-9," LSE Research Online Documents on Economics 59250, London School of Economics and Political Science, LSE Library.
    16. Ryusuke Ihara, 2011. "Agglomeration with the pros and cons of labor heterogeneity," ERSA conference papers ersa11p528, European Regional Science Association.
    17. Fumihiko Isada & Yuriko Isada, 2015. "Trans-nationalisation of a main office in a multinational firm," International Journal of Business and Management, International Institute of Social and Economic Sciences, vol. 3(4), pages 15-40, November.
    18. Florian Noseleit & Rene Söllner, 2011. "Diversity of human capital and regional growth," ERSA conference papers ersa10p245, European Regional Science Association.
    19. Annapoornima M. Subramanian & Young Rok Choi & Soo-Hoon Lee & Chang-Chieh Hang, 2016. "Linking technological and educational level diversities to innovation performance," The Journal of Technology Transfer, Springer, vol. 41(2), pages 182-204, April.
    20. Martin Fiszbein, 2017. "Agricultural Diversity, Structural Change and Long-run Development: Evidence from the U.S," NBER Working Papers 23183, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    knowledge creation; knowledge externalities; microfoundations of endogenous growth; knowledge diversity and growth;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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