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Innovation and Inequality in a Small World

Author

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  • Ines Lindner

    (VU Amsterdam and Tinbergen Institute, The Netherlands)

  • Holger Strulik

    (University of Goettingen, Germany)

Abstract

We present a multi-country theory of economic growth and R&D-driven technological progress in which countries are connected by a network of knowledge exchange. Technological progress in any country depends on the state of technology in the countries it exchanges knowledge with. The diffusion of knowledge throughout the world explains a period of increasing world inequality after the take-off of the forerunners of the industrial revolution, followed by decreasing relative inequality. Knowledge diffusion through a Small World network produces an extraordinary diversity of country growth performances, including the overtaking of individual countries and the replacement of the technologically leading country in the course of world development.

Suggested Citation

  • Ines Lindner & Holger Strulik, 2017. "Innovation and Inequality in a Small World," Tinbergen Institute Discussion Papers 17-057/II, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20170057
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    More about this item

    Keywords

    networks; knowledge diffusion; economic growth; world income distribution;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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