Abstract
A model’s purpose is to provide insights about particular features of the world, which requires making simplifying assumptions. The usual procedure is to start with a very simplified model and then make it increasingly realistic; in the process, one comes to a more sophisticated understanding of the actual system (Krugman 1994, p. 53). Hence before starting, one must check what particular feature of the world is actually of interest if the context slightly changes. Section 5.1 reviews some approaches to regional development, including new economic geography. In Sects. 5.2 and 5.3, some particular features of standard neoclassical growth models are reconsidered in view of setting up a model of regional growth.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
- 2.
Paul Krugman won the Prize in Economic Sciences in Memory of Alfred Nobel “for his analysis of trade patterns and location of economic activity” in 2008 (http://nobelprize.org/nobel_prizes/economics/, queried on 17-October-2008).
- 3.
An early attempt at a neoclassical model of regional growth with free factor mobility at zero transportation cost is developed by Borts and Stein (1964), where lower wages in one region will attract investments and therefore lead to a higher growth rate of the physical capital stock. This in turn will raise the growth rate of wages, and therefore cause convergence between regions.
- 4.
If just one single moment of disequilibrium is allowed for, to be precise.
- 5.
Central Statistics Office Ireland, data available from: http://www.cso.ie/statistics/nationalingp.htm, queried on 17-April-2007
- 6.
See Der Spiegel 12/2007.
- 7.
The stock of German directly invested capital stood at 17.3 billion euros, and the stock of French directly invested capital at 1.4 billion euros.
- 8.
The stock of Austrian directly invested capital stood at 4.6 billion euros, and the stock of British directly invested capital at 0.3 billion euros.
- 9.
These developments indeed reveal divergence mechanisms by taking a closer look at the development of wages. In a study of the growing divide of labour incomes in the USA since the 1960s, Galbraith (2000) clusters industries in relation to wage disparities. He comes to the conclusion that the US-American industry is divided into a “knowledge sector” and a “consumption goods sector.” Illustratively, the list of industries with the highest rise in total employee annual earnings per production worker hour by industry is almost identical to definition of high-technology industries according to Standard International Trade Classification (SITC) (for details regarding the classification see Hatzichronoglou 1997).
References
Acs, ZJ (ed) (2000) Regional innovation, knowledge and global change. Pinter, London and New York, NY
Armstrong H, Taylor J (2000) Regional economics and policy, 3rd edn. Blackwell, Oxford and Malden, MA
Azariadis C, Drazen A (1990) Threshold externalities in economic development. Q J Econ 105:501–526
Borts GH, Stein JL (1964) Economic growth in a free market Reprint 1966. Columbia University Press, New York, NY
Dixit AK, Stiglitz JE (1977) Monopolistic competition and optimum product diversity. Am Econ Rev 67(3):297–308
Fischer MM, Revilla Diez J, Snickars F (2001) Metropolitan systems of innovation – theory and evidence from three metropolitan regions in Europe. Springer, Berlin, Heidelberg and New York, NY
Freeman C, Soete L (1994) The economics of industrial innovation Reprint 1997. Pinter, London
Galbraith JK (2000) Created unequal – the crisis in American pay. The University of Chicago Press, Chicago, IL
Hirschman AO (1958) Interregional and international transmission of economic growth. In: Friedmann, J and Alonso, W (eds) (1975): Regional policy – readings in theory and applications. MIT Press, Cambridge, MA and London
Kaldor N (1970) The case for regional policies. Scott J Polit Econ 17(3):337–348
Krugman P (1991a) Increasing returns and economic geography. J Polit Econ 99(3):483–499
Krugman P (1991b) Geography and trade Reprint 1992. MIT Press, Leuven, Leuven University Press and Cambridge, MA and London
Lucas RE Jr (1990) Why doesn’t capital flow from rich to poor countries? Am Econ Rev 80(2):92–96
Magyar Nemzeti Bank (2007) Foreign Direct Investment – Hungary 1995–2005. Available from: http://english.mnb.hu/engine.aspx?page=mnben_statisztikai_kiadvanyok, queried on 09-May-2007
Marshall A (1890) Principles of economics Reprint 1938. Macmillan, London
Myrdal G (1957) Economic theory and under-developed regions Reprint 1964. Duckworth, London
Oesterreichische Nationalbank (2006) Sonderheft Statistiken: Direktinvestitionen 2004. Oesterreichische Nationalbank, Vienna
Richardson HW (1973) Regional growth theory. Macmillan, London and Basingstoke
Sinn H-W (2004) Ist Deutschland noch zu retten? Econ, Munich
Statistik Austria (2005) Volkswirtschaftliche Gesamtrechnungen 1976–2004. Statistik Austria, Vienna
Hatzichronoglou T (1997) Revision of the high-technology sector and product classification, Technology and Industry Working Papers 1997/2
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2011 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Sardadvar, S. (2011). Remarks on Regional Growth. In: Economic Growth in the Regions of Europe. Contributions to Economics, vol 1. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2637-1_5
Download citation
DOI: https://doi.org/10.1007/978-3-7908-2637-1_5
Published:
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-2636-4
Online ISBN: 978-3-7908-2637-1
eBook Packages: Business and EconomicsEconomics and Finance (R0)