SUMMARYThis paper presents a theoretical growth model which explicitly takes into account technological interdependence among economies and examines the impact of spillover effects. Technological interdependence is assumed to operate through spatial externalities. The magnitude of the physical capital externalities at steady state, which is not usually identified in the literature, is estimated using a spatial econometric specification. Spatial externalities are found to be significant. This spatially augmented Solow model yields a conditional convergence equation which is characterized by parameter heterogeneity. A locally linear spatial autoregressive specification is then estimated providing a convergence speed estimate for each country of the sample.

SUMMARY We derive a quantity‐based structural gravity equation system in which both trade flows and error terms are cross‐sectionally correlated. This system can be estimated using techniques borrowed from the spatial econometrics literature. To illustrate our methodology, we apply it to a well‐known Canada–US trade dataset. We find that border effects between the USA and Canada are smaller than suggested by previous studies: about 7.5 for Canadian provinces and about 1.3 for US states. Hence controlling directly for cross‐sectional interdependence among both trade flows and error terms reduces measured border effects by capturing ‘multilateral resistance’. Copyright © 2010 John Wiley & Sons, Ltd.

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JEL Classification O18 - O47 - O52 - R11 - R12
A previous version of this paper was presented at the 3rd Spatial Econometrics Workshop in Strasbourg, June 9, 2004 and at the XLth Conference of the French Speaking Regional Science Association, Brussels, September 1–3, 2004International audienceThe aim of this paper is to study the space–time dynamics of European regional per capita gross domestic product (GDP) in the perspective of the enlargement of the European Union using exploratory spatial data analysis. We find strong evidence of global and local spatial autocorrelation as well as spatial heterogeneity in the distribution of regional per capita GDP in a sample of 258 European regions including regions from acceding and candidate European countries over the period 1995–2000. However, contrary to previous results obtained in the literature highlighting a North–South polarization scheme, the enlargement process leads to a new North–West–East polarization scheme. The economic dynamism of EU15 regions and acceding or candidate regions is also investigated by exploring the spatial pattern of regional growth. Implications for regional development and cohesion policies are finally suggested

Multi-country model, Schumpeterian growth, R&D spillovers, Spatial econometrics, O4, O33, C21,