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Location Patterns of Modern and Traditional Sectors and Technological Growth: Location Pattern Matters

This paper presents an examination of the circular and cumulative causation between the concentration of skilled workers and technological growth by extending the two-city model formulated by Bertinelli and Black [J. Urban Economics (2004)] to include the endogenous spatial industrial configuration of modern and traditional sectors. Spatial industrial configurations across two cities are classifiable into four patterns. For each pattern, we analyze: 1) the cumulative causation between the concentration of skilled workers and technological growth, and 2) the effects of infrastructure on that causation. Results show that the spatial industrial configuration pattern matters for determining the growth rate of technology.