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and Feldman, 1996 or Audretsch and Stephan, 1996) show that unformalized knowledge may playa major role in the innovation of new products. Now if unformalized knowledge is communicated personally, distance will be an important variable in this process, since the intensity of contacts between persons can be expected to be negatively correlated to the distance between them. In the discussion of section 3.3.1 (page 42) we saw that it was this aspect of localization that Marshall had in mind when he was alluding to "local trade secrets".4 Note that if this spatial dimension of communication between agents exists, it is possible to transfer it to regional aggregates of agents: the closer two regions, the more they will be able to profit from the respective pool of human capital (R&D-output etc.) of the other region. This argument gives a spatial 5 interpretation of the literature on endogenous growth. Now if these spillovers have a spatial dimension then it follows from the discussion in chapter 3 that they will be one driving force in the dynamics of agglomeration. With the model to be developed in this chapter I will investigate the hy­ pothesis that it is these forces of agglomeration (i.e. spatial spillovers of nonrival goods or foctors) that are responsible for the inhomogeneous pattern of growth con­ vergence. To analyze this phenomenon, I consider different types of regional aggregates and different distances in the model.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction and Motivation

Abstract
The question of why economic activity grows is amongst the oldest and most prominent ones in economic analysis. In his classic paper, Solow [1956] suggested a formal model of macroeconomic growth where this growth is driven by the accumulation of factors of production (labour and capital) and by technical change. The dynamics of technical change has not been further specified in this neoclassical growth model but has been assumed to occur exogenously or “autonomously”. Although this assumption was strongly simplifying with regard to the process of technical change it allowed the implications of mere factor accumulation to be distinguished from the effects of technical change on the dynamics of economic growth. Hence the neoclassical growth theory allowed both phenomena to be considered as two different and isolated ones.
Max Keilbach

Chapter 2. Why and How Does Economic Activity Grow? An Overview of the Literature

Abstract
The question of why economic activity grows is amongst the oldest and most prominent in economic analysis. Starting with Smith [1776], growth theory has attracted a considerable number of scholars. Recently the discussion on economic growth has been revived and has entered the literature under the notion of “new growth theory”. Since this thesis is on the dynamics of regional growth, I will start the theoretical exposition with an overview of the literature on growth. In particular, I will summarize the new growth theory but before, I will recapitulate its origin - the neoclassical growth theory. I will also discuss in how far the neoclassical growth theory will help to understand differences in regional growth. This discussion will consider theories of regional convergence of growth rates. Keynesian or Schumpeterian approaches to growth will not be considered. The findings of this chapter will be summarized in section 2.4.
Max Keilbach

Chapter 3. Why and How Does Economic Activity Concentrate in Space? Another Overview of the Literature

Abstract
The notion of space is not a very present one in standard economic literature. Indeed, browsing an index of a standard textbook one will rarely find a reference to “space” or analogous concepts. In recent years however, the interest in spatial economics and — thus — the number of publications in major journals that deal with spatial issues has increased significantly. However, taking a closer look, one realizes that “space” is actually amongst the oldest subjects of economic analysis and has managed to occupy its niche pretty early and to stay there since.
Max Keilbach

Chapter 4. Spatial Knowledge Spillovers and the Dynamics of Agglomeration and Regional Growth

Abstract
As shown in chapter 2, the classical model of growth predicts regional convergence of growth rates of per-capita income. Indeed, on a regionally aggregated level — such as different countries or large administrative subregions of countries as e.g. the federal states of the US — we could observe regional convergence.1 These regions have in common that they are similar in structure, i.e. they usually have rural and agglomerated areas and even some kind of capital that is the administrative centre of the country (or the region). However, as we took a closer look at spatially disaggregated subregions (in section 2.3.2.2) such a homogenous convergence patterns could no longer be observed. It is true that we observe convergence between agglomerated areas and their surrounding less densely populated areas. Rural areas however display a non-converging behaviour regarding their growth rate of per-capita income.2 This is a puzzling observation which is not conform with the neoclassical growth theory. Apparently, the character of a region, i.e. whether it is a rural area, a suburb or a city determines its growth trajectory. This would imply that spatially aggregated analysis would simply average away the effects of regional factor accumulation and thus of regional growth.
Max Keilbach

Chapter 5. Marshallian Externalities, Spatial Self-Organization and Regional Growth — an Agent Based Approach

Abstract
The aim of the model set up in the previous chapter was to investigate the spatial allocation of production factors and its consequences for the dynamics of regional growth under the hypotheses of Marshallian externalities. Some of the phase spaces of the model displayed multiple equilibria, it was therefore not possible to predict where the factors will settle, although out of equilibria, the model implied a deterministic movement of the variables. Also, the model was limited to two regions, of course a strong simplification. One aim of this chapter is therefore to enlarge the model of the previous section to an arbitrary number of regions. Then the analysis cannot be done in the same way anymore since the number of regional interactions increases more than linearly. The analysis thus becomes technically too complex. Once, more than two regions are considered, the movements out of the equilibria points become merely unpredictable. The process of allocation and convergence to a stable pattern in these kind of models has therefore been described as self-organization. Another aim of this chapter is to make the model’s property of self-organisation explicit.
Max Keilbach

Chapter 6. Spatial Processes in the Economy — an Empirical Investigation

Abstract
Like in the economic literature (see discussion in 3) space does not play an important role in the econometric literature. Although geographers and regional scientists have been interested in the quantitative analysis of spatial processes for quite a long time1, econometricians (if we distinguish between econometrics and statistics as the first being driven by economic models whereas the latter is driven rather by data) discovered the phenomenon of space only recently and (as is true for virtually all economic textbooks) space is absent in all major econometric textbooks. Anselin [1988] is one of the first comprehensive textbooks that discusses the problems the inclusion of space will cause in econometric analysis and suggests different methods to tackle them.
Max Keilbach

Chapter 7. Summary and Conclusion

Abstract
The main purpose of this book is to investigate how it is possible to observe convergence of the per-capita income of regions although there might be increasing returns to the accumulation of knowledge. To investigate this puzzle I put forward the hypothesis that since parts of that knowledge are tacit and therefore cannot be communicated via means of telecommunication, the notion of distance is of importance. If, however, distance plays a role, the level of spatial aggregation in convergence analysis can be assumed to be of vital importance.
Max Keilbach

Backmatter

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