Incorporating Space in the Theory of Endogenous Growth: Contributions from the New Economic Geography

Bond‐Smith, Steven; McCann, Philip

doi:10.1007/978-3-642-23430-9_14

“…Its canonical setting is the so-called core-periphery model introduced by Krugman (1991), showing the link between agglomeration and economic integration, and an early analytically solvable version with exogenous size asymmetries or asymmetric trade costs is provided by Forslid and Ottaviano (2003). In particular, we are close to those papers embedding the core-periphery model in an endogenous growth framework; see for example, Martin and Ottaviano (1999), Baldwin and Forslid (2000), Baldwin et al (2001), and Fujita and Thisse (2003) for some seminal contributions and Bond-Smith and McCann (2014) for a literature review. 2 Among the numerous subsequent core-periphery growth models, we share with Bond-Smith and McCann (2020) a focus on innovation, the presence of multiple sectors, and footloose skilled workers (i.e., freely choosing location in response to wage pressure).…”

mentioning

confidence: 84%

A tale of two cities: Communication, innovation, and divergence

Magrini,

Spiganti

2023

Economic Inquiry

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We present a two‐area endogenous growth model where abstract knowledge flows at no cost across space but tacit knowledge arises from the interaction among researchers and is hampered by distance. Digital communication reduces this “cost of distance” and reinforces productive specialization, leading to an increase in the system‐wide growth rate but at the cost of more inequality within and across areas. These results are consistent with evidences on the rise in the concentration of innovative activities, income inequality, and skills and income divergence across US urban areas.

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“…Its canonical setting is the so-called core-periphery model introduced by Krugman (1991), showing the link between agglomeration and economic integration, and an early analytically solvable version with exogenous size asymmetries or asymmetric trade costs is provided by Forslid and Ottaviano (2003). In particular, we are close to those papers embedding the core-periphery model in an endogenous growth framework; see for example, Martin and Ottaviano (1999), Baldwin and Forslid (2000), Baldwin et al (2001), and Fujita and Thisse (2003) for some seminal contributions and Bond-Smith and McCann (2014) for a literature review. 2 Among the numerous subsequent core-periphery growth models, we share with Bond-Smith and McCann (2020) a focus on innovation, the presence of multiple sectors, and footloose skilled workers (i.e., freely choosing location in response to wage pressure).…”

Section: Previous Literaturementioning

confidence: 74%