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Asia-Pacific Journal of Regional Science

, Volume 3, Issue 3, pp 719–730 | Cite as

The magnification of a lagging region’s initial economic disadvantages on the balanced growth path

  • Amitrajeet A. BatabyalEmail author
  • Peter Nijkamp
Article
  • 54 Downloads

Abstract

We analyze aspects of long-run economic growth in stylized lagging and leading regions. Both regions use physical capital, research and development (R&D), and knowledgeable workers to produce a final consumption good. The lagging region faces two key economic disadvantages. Specifically, the constant fractions of the output of the final consumption good that are saved to enhance the stocks of physical capital and R&D are assumed to be twice as large in the leading region, as they are in the lagging region. In this scenario, we perform three tasks. First, we determine the ratio of the balanced growth path (BGP) value of output per knowledgeable worker in the leading region to its value in the lagging region. Second, we ascertain the ratio of the BGP value of R&D per knowledgeable worker in the leading region to its value in the lagging region. Finally, we show the extent to which the lagging region’s initial economic disadvantages are magnified on the BGP and then discuss some policy implications.

Keywords

Economic growth Lagging region Leading region Magnification effect 

JEL Classification

R11 O18 

Notes

Acknowledgements

For their helpful comments on a previous version of this paper, we thank the Editor-in-Chief Yoshiro Higano, two anonymous reviewers, and participants in The Regional Science Academy Workshop in the Lulea University of Technology, Lulea, Sweden, in June 2018, the Annual Meeting of the Regional Science Association International’s Japan Section in Hokkai-Gakuen University, Sapporo, Japan, in October 2018, and the Annual Conference of the North American Regional Science Council, San Antonio, Texas, in November 2018. In addition, Batabyal acknowledges financial support from the Gosnell endowment at RIT. The usual disclaimer applies.

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Copyright information

© The Japan Section of the Regional Science Association International 2019

Authors and Affiliations

  1. 1.Department of EconomicsRochester Institute of TechnologyRochesterUSA
  2. 2.Tinbergen InstituteAmsterdamThe Netherlands
  3. 3.A. Mickiewicz UniversityPoznanPoland
  4. 4.JADS‘s HertogenboschThe Netherlands

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