Autore
Fingleton, Bernard

Titolo
Economic geography with spatial conometrics:A 'third way'to analyse economic development and 'equilibrium', with application to the EU regions
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1999 - Fascicolo: 21 - Pagina iniziale: 1 - Pagina finale: 48

The main item of agreement between thè 'new' and 'old' economie geography is thè role of increasing returns in regional economie development. This provides a focal point for thè model of this paper, which aims to highlight thè existence of a 'third way' somewhere between thè analysis provided by these two competing modes of explanation. Increasing reiurns are represented by thè Verdoorn Law linking manufacturing output and productivity growth, which is augmented to include endogenous technical progress involving diffusion, spillover effects and putative human capitai effects. The model is estimated using data for regions of thè EU, thus emphasizing thè need to confront Iheory with data. The approach of thè paper thus avoids 'thè lost scientific cause' of much of contemporary 'economie geography proper' and ihe constraints posed by ihe Iheory of 'new economie geography'. The implicalions of thè model are explored and assumptions are imposed leading to a 'stochastic steady state' as an approximation to real world turbulence, and as an alternative to thè Markov chain stochastic equilibrium suggested by Quah(1993). The paper shows that thè implications of interregional spillovers are fasler productivity growth and higher productivity levels, a irend Ihat is accelerated with endogenously determined spillover. Without calch up, regional produclivity levels diverge with no stable steady state and one region becomes increasingly dominant, but catch up ensures that cross-regional productivity growth rates lend to equality.



Testo completo: http://www.iue.it/ECO/WP-Texts/ECO99-21.pdf

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