Regional Economic Inequality, Growth Theory and Technological Change
This theoretical paper examines the contributions of the neo-classical approach to the explanation of deep and persistent geographical inequalities in economic development. Central insights of each approach are combined in a model of regional economic inequality, here defined as differences in regional labour productivity. The model attempts to combine theoretical insights from approaches that are usually considered to be incompatible. At the core of the model are the concepts of embodied and disembodied technical change. These concepts are related to differences in regional socio-economic environments and they indicate avenues of explanation of regional differences in levels of labour productivity and the relative permanence of these differences. Disembodied technical progress is related to positive externalities and spillover effects, these being inherently spatial. The paper also indicates a formulation of the model that permits empirical operationalisation.
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