Trade, Knowledge Spillovers, and Growth
Gene M. Grossman
Princeton University - Woodrow Wilson School of Public and International Affairs; Princeton University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)
Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
NBER Working Paper No. w3485
In this paper, we examine one channel through which the trade regime might affect growth in the long run. We model endogenous technological progress that results from profit maximizing investments by far-sighted entrepreneurs. Productivity in the research lab depends upon the "stock of knowledge capital", a variable reflecting the state of scientific, engineering and industrial know-how in the local economy. We argue that local knowledge capital is likely to vary positively with the extent of contact between domestic agents and their counterparts in the international research and business communities, and that the number of such contacts increases with the level of commercial exchange. We derive the implications of this for the relationship between trade and growth.
Number of Pages in PDF File: 17working papers series
Date posted: June 11, 2000
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