The Magnification of a Lagging Region's Initial Economic Disadvantages on the Balanced Growth Path

Asia-Pacific Journal of Regional Science, Vol. 3, pp. 719-730, 2019

Posted: 13 Nov 2019

See all articles by Amitrajeet A. Batabyal

Amitrajeet A. Batabyal

Rochester Institute of Technology

Peter Nijkamp

Vrije Universiteit Amsterdam, School of Business and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 4, 2019

Abstract

We examine aspects of long run economic growth in stylized lagging and leading regions. Both regions use physical capital, research and development (R&D), and knowledgeable workers to produce a final consumption good. The lagging region faces two key economic disadvantages. Specifically, the constant fractions of the output of the final consumption good that are saved to enhance the stocks of physical capital and R&D are assumed to be twice as large in the leading region as they are in the lagging region. In this setting, we perform three tasks. First, we determine the ratio of the balanced growth path (BGP) value of output per knowledgeable worker in the leading region to its value in the lagging region. Second, we ascertain the ratio of the BGP value of R&D per knowledgeable worker in the leading region to its value in the lagging region. Finally, we show the extent to which the lagging region’s initial economic disadvantages are magnified on the BGP and then discuss some policy implications.

Keywords: Economic Growth, Lagging Region, Leading Region, Magnification Effect

JEL Classification: R11, O18

Suggested Citation

Batabyal, Amitrajeet A. and Nijkamp, Peter, The Magnification of a Lagging Region's Initial Economic Disadvantages on the Balanced Growth Path (November 4, 2019). Asia-Pacific Journal of Regional Science, Vol. 3, pp. 719-730, 2019, Available at SSRN: https://ssrn.com/abstract=3480638

Amitrajeet A. Batabyal (Contact Author)

Rochester Institute of Technology ( email )

Department of Economics, RIT
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Rochester, NY NEW YORK 14623-5604
United States
5853134063 (Phone)
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HOME PAGE: http://people.rit.edu/aabgsh

Peter Nijkamp

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

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