Endogenous, ideas-led, growth theory and agent based modelling with
neighbourhood effects literature are crossed. In an economic overlapping
generations framework, it is shown how social interactions and neighbourhood
effects are of vital importance in the endogenous determination of the long run
number of skilled workers and therefore of the growth prospects of an economy.
Neighbourhood effects interact with the initial distribution of educated agents
across space and play a key role in the long run stabilisation of the number of
educated individuals. Our model implies a tendency towards segregation, with a
possibly positive influence on growth, if team effects operate. The long run
growth rate is also shown to depend on the rate of time preference. Initial
circumstances are of vital importance for long run outcomes. A poor initial
education endowment will imply a long run reduced number of skilled workers and
a mediocre growth rate, so there no economic convergence tendency. On the
contrary, poor societies will grow less, or will even fall into a poverty trap,
and will diverge continuously from richer ones.Comment: 12 pages and 3 figure