Do knowledge externalities lead to growth in economic complexity? Empirical evidence from Colombia

Navroop K Sahdev
Additional contact information
Navroop K Sahdev: Center for International Development at Harvard University, Cambridge, USA

Palgrave Communications, 2016, vol. 2, issue 1, 1-15

Abstract: Abstract We live in a complex economic system where externalities play a key role in fostering growth in complexity through increasing interdependence of interacting agents. This study tests this hypothesis for the case of Colombia. We ask whether knowledge externalities lead to growth in economic complexity. If yes, which variety of knowledge externalities—Marshall-Arrow-Romer (MAR), Porter or Jacobs? Results from our empirical investigation uphold the MAR theories of externalities or intra-industrial externalities, which are maximized with high local specialization1 and local monopoly. A pattern of convergence in economic complexity of Colombian municipalities emerges from our results, supporting Schumpeterian growth theories, which advocate that knowledge externalities drive convergence. This is in line with the recent macroeconomic trends of the Colombian economy, which is suffering from “Dutch disease” leading to a contraction in its domestic economy. We show that knowledge externalities are a mechanism through which convergence dynamics are brought about and fostered in the domestic economy.

Date: 2016
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/palcomms.2016.86 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palcom:v:2:y:2016:i:1:d:10.1057_palcomms.2016.86

Ordering information: This journal article can be ordered from
https://www.nature.com/palcomms/about

DOI: 10.1057/palcomms.2016.86

Access Statistics for this article

More articles in Palgrave Communications from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().