Urban Growth and Convergence Dynamics after COVID-19
30 Pages Posted: 12 Jan 2021
Date Written: January 12, 2021
Internet and near-instant communication services have had a strong impact on the way people communicate and exchange information since the end of the 1990s. The COVID-19 pandemic shock is likely to provide a dramatic boost to this phenomenon. In the world that will emerge from lockdown, digital communication and videoconferencing will be integral part of daily working and social life to a much higher extent than before. This will have a disproportionally strong impact on knowledge based activities, and therefore on research. This paper presents a theoretical model of endogenous economic growth with the aim of providing hints on the possible consequences of the COVID-19 pandemic shock on income per capita growth and disparities within a system of integrated urban areas. In the model, abstract technological knowledge flows at no cost across space. In contrast, flows of tacit knowledge arise from the interaction between researchers and hence tends to be hampered by distance. Within this framework, the diffusion of broadband technology, high-speed connections and videoconferencing takes the form of a reduction of the “cost of distance” for flows of tacit knowledge. This reinforces productive specialization that, in turn, yields an increase in the system-wide, common growth rate and an increase in income per capita disparities across areas. On the other hand, social distancing is likely to yield an asymmetric negative impact on the productivity of urban research systems thus leading to a decrease in the growth rate.
Keywords: COVID-19, social distancing, videoconferencing, innovation, growth, disparities
JEL Classification: O31, O41, O51, R12
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