The effects of supraregional innovation and production collaboration on technology development in a multiregional world: A spatial agent-based model study

Abstract

With globalization, firms acquire locally unavailable inputs from and collaborate in innovation with firms in other regions. We contend that, depending on the collaboration distances feasible and spatial layout of regions, a core-periphery structure of regions emerges, in which core regions produce more advanced and complex products. We develop a spatial agent-based model of (supraregional) firm collaboration in production and innovation to study technological progress. We find that when collaboration is possible over greater distances, agents produce more advanced and more complex products. Moreover, we find that, in general, the core-periphery structure indeed emerges. However, for some layouts, the core-periphery structure vanishes almost immediately, while for others first becomes stronger, peaks and then vanishes with an increase in collaboration distance. Moreover, we find that the properties of the technology structure play a prominent mediating role, e.g. the effect of supraregional collaboration on technological progress may be strong for some and relatively weak for other structures.