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Innovation and Inequality in a Small World

CEGE Discussion Paper Number 313 – June 2017

42 Pages Posted: 20 Jun 2017  

Ines Lindner

Free University Amsterdam

Holger Strulik

University of Goettingen (Gottingen) - School of Law, Economics, Social Sciences

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Date Written: June 19, 2017

Abstract

We present a multi-country theory of economic growth and R&D driven technological progress in which countries are connected by a network of knowledge exchange. Technological progress in any country depends on the state of technology in the countries it exchanges knowledge with. The diffusion of knowledge throughout the world explains a period of increasing world inequality after the take-off of the forerunners of the industrial revolution, followed by decreasing relative inequality. Knowledge diffusion through a Small World network produces an extraordinary diversity of country growth performances, including the overtaking of individual countries and the replacement of the technologically leading country in the course of world development.

Keywords: networks, knowledge diffusion, economic growth, world income distribution

JEL Classification: O10; O40; D85; F43

Suggested Citation

Lindner, Ines and Strulik, Holger, Innovation and Inequality in a Small World (June 19, 2017). CEGE Discussion Paper Number 313 – June 2017 . Available at SSRN: https://ssrn.com/abstract=2988904 or http://dx.doi.org/10.2139/ssrn.2988904

Ines Lindner (Contact Author)

Free University Amsterdam ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands

Holger Strulik

University of Goettingen (Gottingen) - School of Law, Economics, Social Sciences ( email )

Germany

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