Spatial distance in a technology gap model

This paper analyses the effect of locally bounded knowledge spillovers on regionaldifferences in growth. A model will be developed that allows spillovers to take place acrossregions. Certain conditions determine the amount of spillovers a region receives. By use ofsimulations (with randomised parameter constellations), it is possible to examine the generalbehaviour of the model. It is found that certain patterns in the gaps of the knowledge stocksappear repeatedly. The inclusion of geographical distance in a technology gap model leads tothe observation that when differences (in parameters such as the learning capability or theexogenous rate of knowledge generation) increase across regions, the disparity in terms ofGDP per capita between them decreases. This counterintuitive result is a direct effect from theinclusion of geographical distance in the model.