TITLE:
The Effects of Opening Trade on Regional Inequality in a Model of Scale-Invariant Growth and Foot-Loose Capital
AUTHORS:
Katsufumi Fukuda
KEYWORDS:
Opening Trade; Foot-Loose Capital; R & D Growth; Scale Effects; Regional Inequality; Local and International Spillovers
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.5,
December
19,
2012
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.