The dynamics of knowledge diversity and economic growth

Marcus Berliant and Masahisa Fujita

MPRA Paper from University Library of Munich, Germany

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.

Keywords: knowledge creation; knowledge externalities; microfoundations of endogenous growth; knowledge diversity and growth (search for similar items in EconPapers)
JEL-codes: D83 D90 O31 (search for similar items in EconPapers)
Date: 2008-07-09
New Economics Papers: this item is included in nep-dge, nep-hrm and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: The Dynamics of Knowledge Diversity and Economic Growth (2011)
Working Paper: The Dynamics of Knowledge Diversity and Economic Growth (2010)
Working Paper: The Dynamics of Knowledge Diversity and Economic Growth (2010)
Working Paper: The dynamics of knowledge diversity and economic growth (2009)
Working Paper: The Dynamics of Knowledge Diversity and Economic Growth (2008)
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