Regional External Economies and Economic Growth under Asymmetry

In this article, we explore the impact of regional external economies from human capital accumulation on economic growth. In particular, we allow the extent of local and regional spillovers to vary between the home and foreign economies. Our analysis yields novel insights regarding the diffusion of knowledge across countries. In contrast to the standard, closedeconomy Lucas (1988) model, spillovers within the home country may adversely affect growth in the presence of substantial knowledge flows from the foreign country.