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The dynamics of knowledge diversity and economic growth

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  • Berliant, Marcus
  • Fujita, Masahisa

Abstract

How is long run economic growth related to the diversity of knowledge? We formulate and study a microeconomic model of knowledge creation, through the interactions among a group of heterogeneous R & D workers, embedded in a growth model to address this question. Income to these workers accrues as patent income, whereas transmission of newly created knowledge to all such workers occurs due to public transmission of patent information. The model features myopic R & D workers in a pure externality model of interaction. Surprisingly, in the general case for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. Equilibrium paths are found analytically. Long run economic growth is positively related to both the effectiveness of pairwise R & D worker interaction and to the effectiveness of public knowledge transmission.

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  • Berliant, Marcus & Fujita, Masahisa, 2008. "The dynamics of knowledge diversity and economic growth," MPRA Paper 9514, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9514
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    References listed on IDEAS

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    Cited by:

    1. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2014. "The nexus between labor diversity and firm’s innovation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 303-364, April.
    2. Max Nathan & Neil Lee, 2013. "Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London," Economic Geography, Clark University, vol. 89(4), pages 367-394, October.
    3. Berliant, Marcus & Fujita, Masahisa, 2023. "Knowledge creation through multimodal communication," MPRA Paper 117452, University Library of Munich, Germany.
    4. Sam Tavassoli & Nunzia Carbonara, 2014. "The role of knowledge variety and intensity for regional innovation," Small Business Economics, Springer, vol. 43(2), pages 493-509, August.
    5. Max Nathan, 2011. "Ethnic Inventors, Diversity and Innovation in the UK: Evidence from Patents Microdata," SERC Discussion Papers 0092, Centre for Economic Performance, LSE.
    6. Berliant, Marcus & Fujita, Masahisa, 2012. "Culture and diversity in knowledge creation," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 648-662.
    7. Neil Lee & Max Nathan, 2011. "Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms," SERC Discussion Papers 0069, Centre for Economic Performance, LSE.
    8. Max Nathan, 2013. "Top Team Demographics, Innovation and Business Performance: Findings from English Firms and Cities 2008-9," SERC Discussion Papers 0129, Centre for Economic Performance, LSE.
    9. Charlie Karlsson & Jonna Rickardsson & Joakim Wincent, 2021. "Diversity, innovation and entrepreneurship: where are we and where should we go in future studies?," Small Business Economics, Springer, vol. 56(2), pages 759-772, February.
    10. Marcus Berliant & Chia-Ming Yu, 2015. "Locational Signaling And Agglomeration," Journal of Regional Science, Wiley Blackwell, vol. 55(5), pages 757-773, November.
    11. Siliang Guo & Heng Ma, 2022. "Can the Spatial Function Division of Urbanization Promote Regional Coordinated Development? Evidence from the Yangtze River Economic Belt in China," Sustainability, MDPI, vol. 14(12), pages 1-28, June.
    12. Todo, Yasuyuki & Matous, Petr & Inoue, Hiroyasu, 2016. "The strength of long ties and the weakness of strong ties: Knowledge diffusion through supply chain networks," Research Policy, Elsevier, vol. 45(9), pages 1890-1906.
    13. Orsa Kekezi, 2021. "Diversity of experience and labor productivity in creative industries," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 55(1), pages 1-21, December.
    14. Ryusuke Ihara, 2011. "Agglomeration with the pros and cons of labor heterogeneity," ERSA conference papers ersa11p528, European Regional Science Association.
    15. Silvia Sinicropi & Damiano Cortese, 2021. "(Re)Thinking diversity within sustainable development: A systematic mapping study," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 299-309, January.
    16. Enrico Berkes & Ruben Gaetani, 2021. "The Geography of Unconventional Innovation," The Economic Journal, Royal Economic Society, vol. 131(636), pages 1466-1514.
    17. Nathan, Max, 2013. "Top team demographics, innovation and business performance: findings from English firms and cities 2008-9," LSE Research Online Documents on Economics 59250, London School of Economics and Political Science, LSE Library.
    18. Fumihiko Isada & Yuriko Isada, 2015. "Trans-nationalisation of a main office in a multinational firm," International Journal of Business and Management, International Institute of Social and Economic Sciences, vol. 3(4), pages 15-40, November.
    19. Florian Noseleit & Rene Söllner, 2011. "Diversity of human capital and regional growth," ERSA conference papers ersa10p245, European Regional Science Association.

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    More about this item

    Keywords

    knowledge creation; knowledge externalities; microfoundations of endogenous growth; knowledge diversity and growth;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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