A Simple Dynamic Model of Uneven Development and Overtaking

25 Pages Posted: 31 Dec 2002

See all articles by Klaus Desmet

Klaus Desmet

Southern Methodist University (SMU); Centre for Economic Policy Research (CEPR)

Abstract

This paper extends the Brezis et al. (1993) Ricardian leapfrogging model by introducing geographically mobile capital and allowing for a wider variety of development patterns. In a two-region economy, localised learning-by-doing causes specialisation and uneven development. Technological change reverses the existing development pattern if the new technology locates in the low-wage region. However, the development pattern may also be reinforced if spillovers between the old and the new technology make the leading region a more attractive location. Capital flows are explicitly analysed and it is furthermore shown that inter-regional transfers may reduce the chance of take-off.

Suggested Citation

Desmet, Klaus, A Simple Dynamic Model of Uneven Development and Overtaking. Economic Journal, Vol. 112, pp. 894-918, 2002. Available at SSRN: https://ssrn.com/abstract=347124

Klaus Desmet (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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