Barriers to knowledge spillovers and regional convergence in an evolutionary model

This paper will present a multi-region/multi-country model in which inter-r egional knowledge spillovers determine the growth of regions. Key parameter s in the model are the learning capability of a region and the rate of know ledge generation (R&D). The intensity of spillovers depends on geographical distance between regions. The model is investigated by means of simulation techniques. What results is a core-periphery situation, the exact form of which depends on the assumed spatial structure. The impact of economic integration is investigated by introducing barriers- to-knowledge-spillovers in the model in the form of borders between countri es. Contrary to the popular belief and some economic theories, we find that removing such spillover barriers may result in larger disparity of income levels between regions.