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The dynamics of knowledge diversity and economic growth

  • Berliant, Marcus
  • Fujita, Masahisa

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9514.

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Date of creation: 09 Jul 2008
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Handle: RePEc:pra:mprapa:9514
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  1. Benjamin F. Jones, 2005. "The burden of knowledge and the ‘death of the Renaissance man’: Is innovation getting harder?," Proceedings, Federal Reserve Bank of San Francisco.
  2. Berliant, Marcus & Fujita, Masahisa, 2004. "Knowledge Creation as a Square Dance on the Hilbert Cube," IDE Discussion Papers 14, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  3. Pietro Peretto & Sjak Smulders, 2002. "Technological Distance, Growth And Scale Effects," Economic Journal, Royal Economic Society, vol. 112(481), pages 603-624, July.
  4. Christian Ghiglino, 2005. "Balanced Growth with a Network of Ideas," Working Papers 546, Queen Mary University of London, School of Economics and Finance.
  5. Ola Olsson, 2005. "Technological Opportunity and Growth," Journal of Economic Growth, Springer, vol. 10(1), pages 31-53, 01.
  6. Gilles Duranton & Diego Puga, 2000. "Nursery Cities: Urban diversity, process innovation, and the life-cycle of products," Working Papers dpuga-00-01, University of Toronto, Department of Economics.
  7. Marcus Berliant & Robert R. Reed III & Ping Wang, 2005. "Knowledge Exchange, Matching, and Agglomeration," Urban/Regional 0506013, EconWPA, revised 07 Jul 2005.
  8. Charles I. Jones, 1999. "Growth: With or Without Scale Effects?," American Economic Review, American Economic Association, vol. 89(2), pages 139-144, May.
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  10. Olsson, Ola, 2000. " Knowledge as a Set in Idea Space: An Epistemological View on Growth," Journal of Economic Growth, Springer, vol. 5(3), pages 253-75, September.
  11. Helsley, Robert W. & Strange, William C., 2004. "Knowledge barter in cities," Journal of Urban Economics, Elsevier, vol. 56(2), pages 327-345, September.
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  14. Manuel Trajtenberg & Gil Shiff & Ran Melamed, 2006. "The "Names Game": Harnessing Inventors' Patent Data for Economic Research," NBER Working Papers 12479, National Bureau of Economic Research, Inc.
  15. Michele Boldrin & David K Levine, 2008. "Against Intellectual Monopoly," Levine's Bibliography 122247000000002371, UCLA Department of Economics.
  16. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  17. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-38, October.
  18. Weitzman, Martin L., 1998. "Recombinant Growth," Scholarly Articles 3708468, Harvard University Department of Economics.
  19. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
  20. John P. WALSH & NAGAOKA Sadao, 2009. "Who Invents?: Evidence from the Japan-U.S. inventor survey," Discussion papers 09034, Research Institute of Economy, Trade and Industry (RIETI).
  21. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  22. Dinopoulos, Elias & Thompson, Peter, 1998. " Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-35, December.
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