Structure of the Model
To include the relative location in space in a growth model means that an economy’s performance no longer lies solely within its range and conditions, but rather also depends on developments and decisions made beyond its borders. This chapter lays out the study’s model, which can be described as a growth model of N regional economies with a neoclassical production function that includes human capital, and where physical capital mobility between regional economies takes place. The configuration of the model, that incorporates both N regional economies and their accompanying superordinate economy is presented in Sect. 6.1. Section 6.2 examines specific characteristics of the neoclassical production. Finally, the key equations of the evolution of factors of production are discussed in Sect. 6.3.
KeywordsHuman Capital Regional Economy Physical Capital Marginal Product Knowledge Spillover
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