Human Capital Use, Innovation, Patent Protection, and Economic Growth in Multiple Regions

RIT Economics Department Working Paper No. 12-06

28 Pages Posted: 29 Jul 2012 Last revised: 31 Jul 2012

See all articles by Amitrajeet A. Batabyal

Amitrajeet A. Batabyal

Rochester Institute of Technology

Peter Nijkamp

VU University of Amsterdam - Department of Spatial Economics; Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: July 20, 2012

Abstract

We provide what to the best of our knowledge is the first theoretical analysis of the total effects of human capital use, innovative activity, and patent protection, on economic growth in a model with many regions. In each region, consumers have constant relative risk aversion preferences, there is no human capital growth, and there are three kinds of manufacturing activities involving the production of blueprints for inputs or machines, the inputs or machines themselves, and a single final consumption good. Our analysis leads to four salient results. For any given region, we first describe the balanced growth path (BGP) equilibrium and show that the BGP growth rate depends negatively on the rate at which patents expire. Second, we characterize the transitional dynamics in our model. Third, we determine the value of the patent expiry rate that maximizes the equilibrium growth rate of a region. Finally, we show that a policy of offering perpetual patent protection does not necessarily maximize social welfare in a region.

Keywords: Dynamic, Human Capital, Innovation, Multi-Region Economy, Patent, Stochastic

JEL Classification: R11, O31, L52

Suggested Citation

Batabyal, Amitrajeet A. and Nijkamp, Peter, Human Capital Use, Innovation, Patent Protection, and Economic Growth in Multiple Regions (July 20, 2012). RIT Economics Department Working Paper No. 12-06, Available at SSRN: https://ssrn.com/abstract=2114457 or http://dx.doi.org/10.2139/ssrn.2114457

Amitrajeet A. Batabyal (Contact Author)

Rochester Institute of Technology ( email )

Department of Economics, RIT
92 Lomb Memorial Drive
Rochester, NY NEW YORK 14623-5604
United States
5853134063 (Phone)
5854755777 (Fax)

HOME PAGE: http://people.rit.edu/aabgsh

Peter Nijkamp

VU University of Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 20 4446091 (Phone)
+31 20 4445611 (Fax)

Tinbergen Institute

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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