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Inter-Sectoral Knowledge Diffusion and Scale Effects in Schumpeterian Growth Models

Author

Listed:
  • André Grimaud

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Elie Gray

    (TBS - Toulouse Business School)

Abstract

We formalize inter-sectoral knowledge diffusion in a standard fully endogenous Schumpeterian growth model. Each sector is simultaneously sending and receiving knowledge; thereby, to produce new knowledge, the research and development activity of each sector draws from a pool of knowledge which stems from this diffusion. This enables us to revisit the scale effects issue by revealing how this property (inconsistent with empirical evidence) relates with knowledge diffusion (the importance of which is empirically highlighted). Weshow that suppressing knowledge diffusion across sectors is a sufficient but not necessary condition for obtaining scale-invariancy. Then, we identify several sets of assumptions which enable us to obtain models which are reasonably consistent with empirical evidence both on scale effects and how knowledge diffuses in the economy. Specifically, these models do not exhibit scale effects (or at least not significant ones) while considering various scope of knowledge diffusion (including possible occurrence of general-purpose technologies).

Suggested Citation

  • André Grimaud & Elie Gray, 2024. "Inter-Sectoral Knowledge Diffusion and Scale Effects in Schumpeterian Growth Models," Working Papers hal-04723727, HAL.
    • Handle: RePEc:hal:wpaper:hal-04723727
    Note: View the original document on HAL open archive server: https://hal.science/hal-04723727v1
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