Abstract
Although it is widely acknowledged that interaction between economies has a decisive impact on economic development, there have so far been only a handful of attempts to implement space into theoretical models of economic growth, two of which are discussed in what follows: Sect. 3.1 presents a model that examines the incidence of knowledge spillovers from neighbouring regions within the framework of the Solow model. In Sect. 3.2, a spatial enhancement of the Solow model for N economies is reviewed, along with a brief discussion of approaches that refer to the Verdoorn Law.
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Notes
- 1.
This can be seen by taking the first derivative of the production function of economy i in Eq. (3.8) with respect to the stock of physical capital per worker of any region \(j \ne i\), which will always be positive under the given conditions (i.e. positive values of all variables considered).
- 2.
See for instance Pfaffermayr (2007, p. 10), who assumes that “regional spillovers rest on a region’s ability to learn the productivity improvements of its neighbors.”
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Sardadvar, S. (2011). Growth Models with Spatial Externalities. In: Economic Growth in the Regions of Europe. Contributions to Economics, vol 1. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2637-1_3
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DOI: https://doi.org/10.1007/978-3-7908-2637-1_3
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