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Patterns of Technology, Industry Concentration, and Productivity Growth Without Scale Effects

Colin Davis and Ken-ichi Hashimoto

No 1106, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: This paper investigates the relationship between geographic patterns of industrial activity and endogenous growth in a two region model of trade that exhibits no scale effect. The in-house process innovation of manufacturing firms drives productivity growth and is closely associated with firm-level scales of production and relative levels of accessible technical knowledge. Focusing on long-run industry shares and a cross-region productivity gap, we find that dispersed equilibria with positive industry shares for both regions always produce higher growth rates than core-periphery equilibria with all industry locating in one region. Moreover, the highest growth rate arises in a symmetric steady state that features no productivity gap and equal shares of industry leading to the conclusion that the geographic concentration of industry has a negative impact on overall growth. Convergence towards a dispersed equilibrium, however, is contingent on the levels of inter-regional transport costs and knowledge dispersion. Finally, we explore the implications of greater economic integration arising from reduced transport costs and greater knowledge dispersion for patterns of industry and productivity, and for regional welfare levels within a dispersed equilibrium.

Keywords: Industry Concentration; Industry Share; Productivity Gap; Productivity Growth; Scale Effect (search for similar items in EconPapers)
JEL-codes: F43 O30 O40 R12 (search for similar items in EconPapers)
Pages: 35pages
Date: 2011-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-eff, nep-fdg, nep-geo, nep-opm, nep-sbm, nep-tid and nep-ure
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Journal Article: Patterns of technology, industry concentration, and productivity growth without scale effects (2014) Downloads
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