Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/124402 
Year of Publication: 
2014
Series/Report no.: 
54th Congress of the European Regional Science Association: "Regional development & globalisation: Best practices", 26-29 August 2014, St. Petersburg, Russia
Publisher: 
European Regional Science Association (ERSA), Louvain-la-Neuve
Abstract: 
We study innovation and the resulting Schumpeterian economic growth that this innovation gives rise to in a model with N heterogeneous regions. For each region i where i=1,...,N, our analysis leads to five findings. First, we define the balanced growth path (BGP) allocations and the equilibrium of interest. Second, we stipulate the form of the innovation possibilities frontier that is consistent with balanced economic growth. Third, we derive the growth rate of the ith region in the decentralized equilibrium and show that there are no transitional dynamics. Fourth, we solve the social planner's problem and derive the Pareto optimal growth rate for the ith region. Fifth, we compare the two preceding growth rates and then discuss the circumstances in which there is either too much or too little innovation in (i) the ith region, (ii) the aggregate economy of N>2 regions and (iii) the specific case of an aggregate economy of N=2 regions. Finally, we conclude and then offer suggestions for extending the research described here.
Subjects: 
Human Capital
Innovation
Multi-Region Economy
Schumpeterian Economic Growth
JEL: 
R11
J24
O31
Document Type: 
Conference Paper

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