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Innovation and investments in a regional cross-sectoral growth model: A change is needed in European cohesion policies

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  • Riccardo Cappellin

Abstract

This paper aims to indicate that an economic recovery of the European economy can be pulled by an increase of the aggregate demand and by the adoption of a new European cohesion policy having an industrial and a territorial dimension. The paper illustrates a theoretical model: the model of the 'cross-sectoral demand' and the 'cross-sectoral supply', where growth is based on the interdependent changes of the sectoral structure of the supply and the demand. A crucial role is attributed to the flows of new knowledge, innovation and investment, as factors which affect both the aggregate supply and the aggregate demand. The paper illustrates the characteristics of the equilibrium and the pattern of growth in the model of the 'cross-sectoral demand' and the 'cross-sectoral supply' and it compares this model with the traditional macroeconomic 'AD-AS model'. Then, it indicates that industrial and regional policies are complementary to the monetary and fiscal policies, as they may promote the creation of new productions and determine an increase of GDP and employment at the regional and national level, also in a short-medium term perspective and not only for long term development.

Suggested Citation

  • Riccardo Cappellin, 2016. "Innovation and investments in a regional cross-sectoral growth model: A change is needed in European cohesion policies," ERSA conference papers ersa16p991, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa16p991
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    References listed on IDEAS

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    1. Markusen, Ann, 2007. "A Consumption Base Theory of Development: An Application to the Rural Cultural Economy," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(1), pages 1-15, April.
    2. Riccardo Cappellin, 2011. "Growth, Consumption and Knowledge Cities," Symphonya. Emerging Issues in Management, University of Milano-Bicocca, issue 2 Global , pages 6-22.
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    5. Riccardo Cappellin & Rüdiger Wink, 2009. "International Knowledge and Innovation Networks," Books, Edward Elgar Publishing, number 13503.
    6. Markusen, Ann, 2007. "A Consumption Base Theory of Development: An Application to the Rural Cultural Economy," Agricultural and Resource Economics Review, Cambridge University Press, vol. 36(1), pages 9-23, April.
    7. Riccardo Cappellin, 2012. "Growth in post-industrial cities: an endogenous model," ERSA conference papers ersa12p1168, European Regional Science Association.
    8. Bengt-ake Lundvall & Bjorn Johnson, 1994. "The Learning Economy," Industry and Innovation, Taylor & Francis Journals, vol. 1(2), pages 23-42.
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    Keywords

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    JEL classification:

    • E14 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Austrian; Evolutionary; Institutional
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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