Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098560 | Journal of Economic Dynamics and Control | 2014 | 13 Pages |
Abstract
This paper investigates the relationship between geographic patterns of industry and economic growth in a two-country model of trade with no scale effect, where productivity growth is generated by firm investment in process innovation. We find that dispersed equilibria with industry located in both countries produce higher growth rates than concentrated equilibria with all industry located in one country. The highest growth rate arises for equal industry shares and no productivity gap, implying that industry concentration has a negative effect on overall growth. Convergence towards a dispersed equilibrium is contingent on transport costs and knowledge dispersion.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Colin Davis, Ken-ichi Hashimoto,