Knowledge spillovers, location of industry, and endogenous growth

Kyoko Hirose () and Kazuhiro Yamamoto
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Kyoko Hirose: Graduate School of Economics, Osaka University

No 05-15, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: A Grossman-Helpman-Romer-type endogenous-growth model is developed in this study. This model has two countries in which there are knowledge spillovers that are partially local. Owing to these spillovers, innovation cost in a particular country decreases as the number of firms locating in both that country and the other country increases. If international knowledge spillovers are symmetric, innovation cost is lower in the country that has the larger market. However, if a small-market country can absorb the international knowledge spillovers better than a large-market country, the innovation cost may be lower in the small-market country. When the innovation cost is lower in the country that has a large market, the growth rate increases with agglomeration, which is generated by a reduction in the transportation costs. However, when the innovation cost is lower in the country that has a small market, the growth rate decreases with the reduction in the transportation costs.

Keywords: knowledge spillovers; growth rate; transportation costs; market scale (search for similar items in EconPapers)
JEL-codes: F43 O30 R12 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-06
New Economics Papers: this item is included in nep-dev, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Knowledge spillovers, location of industry, and endogenous growth (2007)
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