Business Intelligence

Endogenous Economic Growth Through Connectivity

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Executive Summary

In this paper the authors show the benefits of regional connectivity and specialization to growth. Starting with one region they show how welfare measured by utility per head increases as the number of connected regions increase. They 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. They 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.

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