A regional model of endogenous growth without scale assumptions

Bond‐Smith, Steven; McCann, Philip; Oxley, Les

doi:10.1080/17421772.2018.1392038

Cited by 23 publications

(10 citation statements)

References 59 publications

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“…The theme of this special issue is to focus on modelling knowledge and innovation spillovers with an emphasis on the context of China. Recent contributions on this subject in this journal, not focusing on China, are by Bond-Smith, McCann, and Oxley (2018), Autant-Bernard and LeSage (2019), and Kazakis (2019).…”

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confidence: 99%

A two-step approach to account for unobserved spatial heterogeneity

Billé

Benedetti

Postiglione

2017

Spatial Economic Analysis

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Empirical analysis in economics often faces the difficulty that the data is correlated and heterogeneous in some unknown form. Spatial parametric approaches have been widely used to account for dependence structures, but the problem of directly deal with spatially varying parameters has been largely unexplored. The problem can be serious in all those cases in which we have no prior information justified by the economic theory. In this paper we propose an algorithm-based procedure which is able to endogenously identify structural breaks in space. The proposed algorithm is illustrated by using two well known house price data sets

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confidence: 99%

A two-step approach to account for unobserved spatial heterogeneity

Billé

Benedetti

Postiglione

2017

Spatial Economic Analysis

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“…Combined, however, our analysis leads us to the conclusion that, given many of the original mayoral combined authorities seemingly lack either of the ingredients of the high-end sectors pursued through the national industrial strategy – namely a highly-educated workforce, or a well-performing sector – whilst other areas have both of those in abundance – the ability to conjure the endogenous growth of Bond-Smith et al. (2018), seems limited.…”

Section: Methodsmentioning

confidence: 87%

Place-based vs. place blind? – Where do England’s new local industrial strategies fit in the ‘levelling up’ agenda?

Nurse

Sykes

2020

Local Economy

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Although rebalancing the UK economy has long been a focus of UK governments, this has recently used the rhetoric of ‘levelling up’. Amongst other policy instruments, the UK’s Modern Industrial Strategy has been an indicator of the core economic priority areas, with selected local areas also invited to produce their own local industrial strategies to provide a more nuanced delivery of those goals. This article considers the economic profile of five of the Combined Authority areas tasked with delivering the first of these local industrial strategies. By examining the profile of educational attainment, and the core sectors, it examines how well equipped they are to capitalise on these key growth sectors. The article finds that in many cases, the combined authorities have sectors which are comparatively under-represented in terms of the national economy, and have a population which is broadly ill-equipped to access job opportunities in those sectors.

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“…More specific mechanisms such as transport prices, port capacities, and congestion costs also likely contribute to mitigating scale effects at some functional economic area level. This highlights the key achievement of this 4G class of models, in that research can now focus on both the mechanisms that achieve linearity and the mechanisms that lead to any observed scale effect at the functional economic area level such as agglomeration economies (Bond-Smith et al, 2018).…”

Section: G Modelsmentioning

confidence: 99%

“…Accounting for domestic trade frictions partially counteracts the scale effect (Ramondo et al ., ) implying a functional area‐level result, but endogenous growth is not the only theory to predict divergences in per capita incomes by scale. Alternatively, mechanisms such as trade (Krugman, ; Eaton and Kortum, , ; Melitz, ) and spatial mechanisms (Bond‐Smith et al ., ) can also drive scale effects by functional economic area. Therefore, so‐called weak scale effects could be apparent in the real world, but theoretical models could also aim to understand the mechanisms that drive such a scale effect rather than assume it within endogenous growth itself.…”

Section: A Disputed Theorymentioning

confidence: 99%

“…Even Jones (2005) recognizes that evidence of any weak form of scale effects can only be found in special case, approximated experiments. Recognizing such limitations, recent proposals suggest that removing scale effects assumptions altogether is important for modeling regional growth such that practical mechanisms can be used to explain and understand the source of any observed scale economies at the regional level, such as sources of agglomeration economies (Bond-Smith et al, 2018).…”

Section: Second-generation Semi-endogenous Growth Models Without Scamentioning

confidence: 99%

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The Decades‐long Dispute Over Scale Effects in the Theory of Economic Growth

Bond‐Smith

2019

Journal of Economic Surveys

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The so‐called “new growth theory” is characterized by the now Nobel Prize winning insight that ideas are a nonrival input to and output from endogenous investment in innovation. Nonrivalry implies increasing returns to scale, but this also unintentionally creates an empirically disputed scale effect that a growing population implies an ever‐increasing growth rate. Empirical evidence supports fully‐endogenous growth without scale effects, but theoretical issues sustain the decades‐long dispute over exactly how to negate the scale effect. This article surveys theoretical approaches to resolving the scale effect and shows how four generations of endogenous growth theory are defined by the maturing of modeling techniques for constraining increasing returns. The synthesis suggests that the dispute over scale effects is really a narrative about how the powerful application of increasing returns has followed a standard theoretical development pattern. This implies that a fourth generation is now emerging that negates the scale effect while retaining fully‐endogenous growth without relying on assumptions of linearity. Instead, the market response to excessive increasing returns to innovation constrains explosive growth by expanding the market, rather than by a linear assumption. This latest class of endogenous growth models may be the final chapter to resolving the long‐running dispute.

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A regional model of endogenous growth without scale assumptions

Cited by 23 publications

References 59 publications

A two-step approach to account for unobserved spatial heterogeneity

A two-step approach to account for unobserved spatial heterogeneity

Place-based vs. place blind? – Where do England’s new local industrial strategies fit in the ‘levelling up’ agenda?

The Decades‐long Dispute Over Scale Effects in the Theory of Economic Growth

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