Research and Development, Regional Spillovers and the Location of Economic Activities

Posted: 10 Jul 2004

Abstract

I present an endogenous growth model that studies the effects of local inter-industry and intra-industry knowledge spillovers in R&D on the allocation of economic activities between two regions. The equilibrium is the result of a tension between a centripetal force, the cost of transporting goods from one region to the other, and a centrifugal force, the cost increase associated with life in a more crowded area. The presence of local knowledge spillovers, which determines the concentration of the R&D activities within one region, also introduces a further centripetal force that makes a symmetric allocation of the economic activities impossible. The concentration of R&D fosters the equilibrium rate of growth of the economy with respect to the case of no-integration, by increasing the positive effect of local knowledge spillovers. Contrary to the findings of the majority of models in the new economic geography literature, within this framework a reduction in transport costs may be associated with a more even geographical distribution of economic activities.

Suggested Citation

Pozzolo, Alberto F., Research and Developement, Regional Spillovers and the Location of Economic Activities. Available at SSRN: https://ssrn.com/abstract=459588

Alberto F. Pozzolo (Contact Author)

Roma Tre University ( email )

Via Ostiense 163
Roma, RM 00154
Italy

HOME PAGE: http://www.uniroma3.it/

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