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The Effects of economic integration on regional growth, an evolutionary model

  • Caniels, Marjolelein
  • Verspagen, Bart

This paper will present a multi-region-multi-country model in which inter-regional knowledgespillovers determine the growth of regions. Key parameters in the model are the learningcapability of a region, and the exogenous rate of knowledge generation (R&D). The intensityof spillovers depends on geographical distance between regions. The model is investigated bymeans of simulation techniques. What results is a core-periphery situation, the exact form ofwhich depends on the assumed spatial structure. One surprising result of the analysis is thatlarger technological differences between regions may lead to smaller disparity in terms of thelong-run spatial distribution of GDP per capita.The impact of economic integration is investigated by comparing two different aspects ofthe model. First, examining a fixed exchange rate system versus a system of flexible exchangerates results in conditions (constellations of parameters) under which fixed exchange rates(compared to flexible exchange rates) generate less disparity across regions. However,depending on the parameter values, fixed exchange rates may also generate more disparity,leading to the conclusion that the effect of monetary integration is ambiguous.Second, the impact of barriers to knowledge spillovers is analysed by assuming that crossborder knowledge flows are hampered compared to inter-country flows. This results in theobservation that reduced cross border flows have a large impact when regions are initiallyunequal with respect to their exogenous rate of knowledge generation or their learningcapability. In these cases, the resulting trends in overall disparity are quite different from thetrends established in a situation of no barriers to knowledge spillovers.

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File URL: http://www-sre.wu-wien.ac.at/ersa/ersaconfs/ersa99/Papers/A219.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa99pa219.

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Date of creation: Aug 1999
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Handle: RePEc:wiw:wiwrsa:ersa99pa219
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  1. J. Bradford De Long, . "Productivity Growth, Convergence, and Welfare: Comment," J. Bradford De Long's Working Papers _129, University of California at Berkeley, Economics Department.
  2. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
  3. Barro, Robert T. & Sala-I-Martin, Xavier, 1992. "Regional growth and migration: A Japan-United States comparison," Journal of the Japanese and International Economies, Elsevier, vol. 6(4), pages 312-346, December.
  4. Jaffe, Adam B, 1989. "Real Effects of Academic Research," American Economic Review, American Economic Association, vol. 79(5), pages 957-70, December.
  5. Acs, Zoltan J & Audretsch, David B & Feldman, Maryann P, 1992. "Real Effects of Academic Research: Comment," American Economic Review, American Economic Association, vol. 82(1), pages 363-67, March.
  6. Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
  7. Freeman, C., 1991. "Networks of innovators: A synthesis of research issues," Research Policy, Elsevier, vol. 20(5), pages 499-514, October.
  8. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
  9. Harry Flam, 1992. "Product Markets and 1992: Full Integration, Large Gains?," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 7-30, Fall.
  10. Grossman, Gene M & Helpman, Elhanan, 1990. "Trade, Innovation, and Growth," American Economic Review, American Economic Association, vol. 80(2), pages 86-91, May.
  11. Jan Fagerberg & Bart Verspagen & Marjolein Cani�ls, 1997. "Technology, Growth and Unemployment across European Regions," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 457-466.
  12. Robert J. Barro & Xavier Sala-i-Martin, 1992. "Regional Growth and Migration: A Japan-U.S. Comparison," NBER Working Papers 4038, National Bureau of Economic Research, Inc.
  13. Malerba, Franco & Orsenigo, Luigi, 1995. "Schumpeterian Patterns of Innovation," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 47-65, February.
  14. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers 629, Yale - Economic Growth Center.
  15. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
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