Template-type: ReDIF-Paper 1.0
Author-Name: Zon, Adriaan van
Author-Email: adriaan.vanzon@maastrichtuniversity.nl
Author-Workplace-Name: UNU-MERIT, and Maastricht University 
Author-Name: Mupela, Evans
Author-Email: mupela@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: Endogenous Economic Growth through Connectivity
Abstract: In this paper we show the benefits of regional connectivity and 
	 specialization to growth. Starting with one region we show how welfare 
	 measured by utility per head increases as the number of connected 
	 regions increase. We assume a common connectivity infrastructure 
	 implemented by satellite, through which the 'Great Connector' (GC) is 
	 able to add new regions to the pool of connected regions by taking a tax 
	 form those already connected. We find that increasing production costs 
	 leads to faster transitions towards the steady state whereas increasing 
	 transportation and communication costs tends to lengthen the transition. 
	 The results point to reductions in transportation and communication 
	 costs in particular as a suitable vehicle to speed up growth. The 
	 results also show a strong positive effect of reductions in the cost of 
	 making new connections. This has a significant impact on both the steady 
	 state growth rate and on transitional growth, while significantly 
	 reducing the transition period.
Classification-JEL: O25, O41, O43, O47, F15, F43 
Keywords: Connectivity, Satellites, Growth, Specialization, Networks
Series: UNU-MERIT Working Papers
Creation-Date: 2010
Number: 001
File-URL: http://www.merit.unu.edu/publications/wppdf/2010/wp2010-001.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2010001