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Growth and the Geography of Knowledge

Marta Aloi, Joanna Poyago-Theotoky and Frederic Tournemaine

No 6951, CESifo Working Paper Series from CESifo Group Munich

Abstract: We analyse how spatial disparities in innovation activities, coupled with migration costs, affect economic geography, growth and regional inequality. We provide conditions for existence and uniqueness of a spatial equilibrium, and for the endogenous emergence of industry clusters. Spatial variations in knowledge spillovers lead to spatial concentration of more innovative firms. Migration costs, however, limit the concentration of economic activities in the most productive region. Narrowing the gap in knowledge spillovers across regions raises growth, and reduces regional inequality by making firms more sensitive to wage differentials. The associated change in the spatial concentration of industries has positive welfare effects.

Keywords: growth; economic geography; geographic labour mobility; innovation; knowledge spillovers; regional economics (search for similar items in EconPapers)
JEL-codes: O41 O31 L13 J61 R32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-geo, nep-knm, nep-tid and nep-ure
Date: 2018
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