Back
 TEL  Vol.2 No.5 , December 2012
The Effects of Opening Trade on Regional Inequality in a Model of Scale-Invariant Growth and Foot-Loose Capital
Abstract: We consider a semi endogenous R & D growth model with international trade, foot-loose capital, and local and international knowledge spillovers in a closed economy and also international knowledge spillovers in an open economy. We show that by opening trade two regions diverge (converge) with (not) sufficiently high intertemporal knowledge spillover in the R & D sector and elasticity of substitution between modern goods, and not sufficiently high (sufficiently high) richer country A’s share of firm owned.
Cite this paper: K. Fukuda, "The Effects of Opening Trade on Regional Inequality in a Model of Scale-Invariant Growth and Foot-Loose Capital," Theoretical Economics Letters, Vol. 2 No. 5, 2012, pp. 423-430. doi: 10.4236/tel.2012.25078.
References

[1]   G. Wan, M. Lu and Z. Chen, “Globalization and Regional Income Inequality: Empirical Evidence from within China,” Review of Income and Wealth, Vol. 53, No. 1, 2007, pp. 35-59. doi:10.1111/j.1475-4991.2007.00217.x

[2]   C. Zhao and Y. Jin and M. Lu, “Economic Opening and Industrial Agglomeration in China,” In: M. Fujita, S. Kumagai and K. Nishikimi, Eds., Economic Integration in East Asia: Perspectives from Spatial and Neoclassical Economics, Edward Elgar Publishing Limited, Cheltenham, 2008, pp. 276-315.

[3]   T. Jian, J. D. Sachs and A. M. Warner, “Trends in Regional Inequality in China,” China Economic Review, Vol. 7, No. 1, 1996, pp. 1-21. doi:10.1016/S1043-951X(96)90017-6

[4]   R. Kosfeld and J. T. Lauridsen, “Dynamic Spatial Modeling of Regional Convergence Processes,” Empirical Economics, Vol. 29, No. 4, 2004, pp. 705-722. doi:10.1007/s00181-004-0204-x

[5]   K. Behrens, J. H. Hamilton, G. I. P. Ottaviano and J. F. Thisse, “Commodity Tax Harmonization and the Location of Industry,” Journal of International Economics, Vol. 72, No. 2, 2007, pp. 271-291. doi:10.1016/j.jinteco.2006.08.002

[6]   K. Behrens, J. H. Hamilton, G. I. P. Ottaviano and J. F. Thisse, “Commodity Tax Competition and Industry Location under the Destination and the Origin Principle,” Regional Science and Urban Economics, Vol. 39, No. 4, 2009, pp. 422-433. doi:10.1016/j.regsciurbeco.2009.01.008

[7]   P. Martin and G. I. P. Ottaviano, “Growing Locations: Industry Location in a Model of Endogenous Growth,” European Economic Review, Vol. 43, No. 2, 1999, pp. 281-302. doi:10.1016/S0014-2921(98)00031-2

[8]   P. Martin and G. I. P. Ottaviano, “Growth and Agglomeration,” International Economic Review, Vol. 42, No. 4, 2001, pp. 947-968. doi:10.1111/1468-2354.00141

[9]   A. Minniti and C. P. Parello, “Trade Integration and Regional Disparity in a Model of Scale-Invariant Growth,” Regional Science and Urban Economics, Vol. 41, No. 1, 2011, pp. 20-31. doi:10.1016/j.regsciurbeco.2010.07.003

[10]   E. Dinopoulos and P. Thompson, “Scale Effects in Schumpeterian Models of Economic Growth,” Journal of Evolutionary Economics, Vol. 9, No. 2, 1999, pp. 157-185. doi:10.1007/s001910050079

[11]   C. I. Jones, “Growth and Ideas,” In: P. Aghion and S. N. Durlauf, Eds., Handbook of Economic Growth, North-Holland, Amsterdam, 2005, pp. 1063-1111. doi:10.1016/S1574-0684(05)01016-6

[12]   C. I. Jones, “R & D-Based Models of Economic Growth,” Journal of Political Economy, Vol. 103, No. 4, 1995, pp. 759-784. doi:10.1086/262002

[13]   E. Dinopoulos and F. Sener, “New Directions in Schumpeterian Growth Theory,” In: H. Hanush and A. Pyka, Eds., Elgar Companion to Neo-Schumpeterian Economics, Edward Elgar Publishing Limited, Cheltenham, 2007. pp. 688-704.

[14]   P. Segerstrom, “Endogenous Growth without Scale Effects,” American Economic Review, Vol. 88, No. 5, 1998, pp. 1290-1310.

[15]   E. Dinopoulos and P. Thompson, “Schumpeterian Growth without Scale Effects,” Journal of Economic Growth, Vol. 3, No. 4, 1998, pp. 313-335. doi:10.1023/A:1009711822294

 
 
Top