Analysis of regional endogenous growth

Usai, S.;Basile, R.

2015-01-01

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Abstract

Neoclassical ‘exogenous’ growth models predict that, under certain conditions (complete markets, free entry and exit, negligible transaction costs and convex technology relative to market size), economies navigate a sea of economic opportunities that reward productive efforts and savings (Solow, 1956; Swan, 1956; Borts, 1960; Borts and Stein, 1964; Barro and Sala-i-Martin, 1995). Thus initially low-income economies typically do not entrap and tend to catch up; only those economies that do not make investments will not escape the low-income status quo.