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Growth and the Geography of Knowledge

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  • Marta Aloi
  • Joanna Poyago-Theotoky
  • Frederic Tournemaine

Abstract

We analyse how spatial disparities in innovation activities, coupled with migration costs, affect economic geography, growth and regional inequality. We provide conditions for existence and uniqueness of a spatial equilibrium, and for the endogenous emergence of industry clusters. Spatial variations in knowledge spillovers lead to spatial concentration of more innovative firms. Migration costs, however, limit the concentration of economic activities in the most productive region. Narrowing the gap in knowledge spillovers across regions raises growth, and reduces regional inequality by making firms more sensitive to wage differentials. The associated change in the spatial concentration of industries has positive welfare effects.

Suggested Citation

  • Marta Aloi & Joanna Poyago-Theotoky & Frederic Tournemaine, 2018. "Growth and the Geography of Knowledge," CESifo Working Paper Series 6951, CESifo.
    • Handle: RePEc:ces:ceswps:_6951
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    More about this item

    Keywords

    growth; economic geography; geographic labour mobility; innovation; knowledge spillovers; regional economics;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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