IDEAS home Printed from https://ideas.repec.org/p/unm/unumer/2010001.html
   My bibliography  Save this paper

Endogenous Economic Growth through Connectivity

Author

Listed:
  • Zon, Adriaan van

    () (UNU-MERIT, and Maastricht University)

  • Mupela, Evans

    () (UNU-MERIT)

Abstract

In this paper we show the benefits of regional connectivity and specialization to growth. Starting with one region we show how welfare measured by utility per head increases as the number of connected regions increase. We assume a common connectivity infrastructure implemented by satellite, through which the 'Great Connector' (GC) is able to add new regions to the pool of connected regions by taking a tax form those already connected. We find that increasing production costs leads to faster transitions towards the steady state whereas increasing transportation and communication costs tends to lengthen the transition. The results point to reductions in transportation and communication costs in particular as a suitable vehicle to speed up growth. The results also show a strong positive effect of reductions in the cost of making new connections. This has a significant impact on both the steady state growth rate and on transitional growth, while significantly reducing the transition period.

Suggested Citation

  • Zon, Adriaan van & Mupela, Evans, 2010. "Endogenous Economic Growth through Connectivity," MERIT Working Papers 001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2010001
    as

    Download full text from publisher

    File URL: https://www.merit.unu.edu/publications/wppdf/2010/wp2010-001.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, pages 1-24.
    2. Brunner, Martin & Strulik, Holger, 2002. "Solution of perfect foresight saddlepoint problems: a simple method and applications," Journal of Economic Dynamics and Control, Elsevier, vol. 26(5), pages 737-753, May.
    3. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
    4. Zon, Adriaan van & Mupela, Evans, 2010. "Endogenous Economic Growth through Connectivity," MERIT Working Papers 001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    6. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    7. repec:hhs:iuiwop:430 is not listed on IDEAS
    8. Belleflamme, Paul & Picard, Pierre & Thisse, Jacques-Francois, 2000. "An Economic Theory of Regional Clusters," Journal of Urban Economics, Elsevier, vol. 48(1), pages 158-184, July.
    9. Fukushima, Marcelo & Kikuchi, Toru, 2008. "Competing Communications Networks and International Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 91-103.
    10. Gilles Duranton & Matthew A. Turner, 2012. "Urban Growth and Transportation," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1407-1440.
    11. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    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. Hall, Andy & Clark, Norman & Frost, Andy, 2010. "Bottom-up, Bottom-line: Development-Relevant Enterprises in East Africa and their Significance for Agricultural Innovation," MERIT Working Papers 042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Zon, Adriaan van & Wiebe, Kirsten, 2010. "Efficient Development Portfolio Design for Sub Saharan Africa," MERIT Working Papers 050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Mairesse, Jacques & Mohnen, Pierre, 2010. "Using Innovation Surveys for Econometric Analysis," Handbook of the Economics of Innovation, Elsevier.
    4. Pant, Laxmi P., 2010. "Assessing Innovations in International Research and Development Practice," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Zhang, Ying & Duysters, Geert, 2010. "Entrepreneurship Development and the Role of Economic Transition in Entrepreneurial Activities in China," MERIT Working Papers 036, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Akcomak, Semih & Stoneman, Paul, 2010. "How novel is social capital: Three cases from the British history that reflect social capital," MERIT Working Papers 015, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Carvalho, Flavia & Costa, Ionara & Duysters, Geert, 2010. "Global Players from Brazil: drivers and challenges in the internationalization process of Brazilian firms," MERIT Working Papers 016, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Kaplinsky, Raphael & Chataway, Joanna & Clark, Norman & Hanlin, Rebecca & Kale, Dinar & Muraguri, Lois & Papaioannou, Theo & Robbins, Peter & Wamae, Watu, 2010. "Below the Radar: What does Innovation in Emerging Economies have to offer other Low Income Economies?," MERIT Working Papers 020, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Samira Guennif & Shyama Ramani, 2010. "Catching up in pharmaceuticals: a comparative study of India and Brazil," CEPN Working Papers hal-00632439, HAL.
    10. Zon, Adriaan van & Mupela, Evans, 2010. "Endogenous Economic Growth through Connectivity," MERIT Working Papers 001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Garcia, Abraham & Mohnen, Pierre, 2010. "Impact of government support on R&D and innovation," MERIT Working Papers 034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    Connectivity; Satellites; Growth; Specialization; Networks;

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    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:unm:unumer:2010001. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten). General contact details of provider: http://edirc.repec.org/data/meritnl.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.