The Impact of Neutral and Nonneutral Productivity Growth on Creative Capital in a Trading Regional Economy

A.A. Batabyal, P. Nijkamp

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We analyze a two-sector model of a trading creative regional economy (TCRE) of the sort studied by Florida. Our analysis focuses on two cases. The first case concerns the impact of faster neutral, whereas the second case concerns the impact of faster nonneutral, productivity growth in the tradable sector on the employment of creative people in each of a TCRE's two sectors. In both cases, the sign of the percentage change in the steady-state use of creative capital in the nontradable sector is ambiguous. In other words, the potential departure of creative people from the tradable to the nontradable sector does not depend upon whether the faster productivity growth being studied is neutral or nonneutral. In addition, because the effects of faster productivity growth in the tradable sector are not necessarily innocuous, a potential role exists for activist policy designed to countermand the possibly negative effects of faster productivity growth on either the tradable or the nontradable sector. This finding of possible "uneven development" is consistent with Florida's view that TCREs can give rise to externalities such as uneven regional development. © 2011 The Ohio State University.
Original languageEnglish
Pages (from-to)61-77
Number of pages16
JournalGeographical Analysis
Issue number1
Publication statusPublished - 2011

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