Technology Progress And Regional Economic Development: A Theoretic Analysis

Technological progress is the power source of long-term economic development, and it's the same in regional economic development. The technologically advanced regions (TARs) are often in a good position in the competition, and that achieves greater development, while the technologically backward regions (TBRs) are usually have less development. Technological progress is so important in regional economic development that it is quite necessary to have some in-depth studies of the topic on technical progress and regional economic development.This article assumes the TARs will have higher productivity and produce more types of products, and based on these, it builds a two-region model to simulate the multi-regional economic system. The analysis shows:In the regional economic system, if a type of products can be produced by most regions, it must be low-end, and it will face the monopolistic competitive market and gets no super-normal profit in the long-run. But the types of products that can be produced by only a few TARs, they must be high-end, and will get generous super-normal profit. Obviously, because of the initial technical advantages, the TARs will have more benefits in the regional division, and achieve greater development; and the super-normal profit can invest on R&D to strengthen the technological advantages and causes greater regional economic development gap, thus circular causation will be on and on.TBRs must break the cycle path to catch up and achieve greater development. When the interregional initial technological gap is small, enhance self-innovation will achieve TBRs' technological catch-up; and when the gap is large, the TBRs can only accept the TARs' technology proliferation to improve the technological level of their own. And there are many channels of technology proliferation, such as technology licensing, direct investment, and so on; different channels often lead to the different effects. In general, though the self-innovative way to achieve technology will be not subject to the TARs' intention in long-run development, but during the process that inevitably lead to labor and other elements' price distortions. And among the channels of technology diffusion, technology licensing is relatively more conducive to the cultivation of their self-innovation capabilities. The TBRs should know both their own circumstances and different ways' pros and cons, and then chose the right catch-up way.This article has 7 chapters in total. Chapter 1 introduces the topics, contents and analyzing methods. Chapter 2 is a literature review. Chapter 3 gives the basic assumption from the real regional economy. Chapter 4 uses a two-region model to simulate the multi-regional economic system, and analyzes the circular causation between regional technology gap and regional economic development gap. Chapters 5 and 6 explore the TBRs' self-innovation and technology diffusion problems. Chapter 7 gives the conclusions of the article.