Engines of Growth: Domestic and Foreign Sources of Innovation

41 Pages Posted: 8 Aug 2000 Last revised: 23 Jun 2012

See all articles by Jonathan Eaton

Jonathan Eaton

Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Samuel S. Kortum

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 1995

Abstract

We examine productivity growth since World War II in the five leading research economies: West Germany, France, the United Kingdom, Japan, and the United States. Available data on the capital-output ratio suggest that these countries grew as they did because of their ability to adopt more productive technologies, not because of capital deepening per se. We present a multicountry model of technological innovation and diffusion which has the implication that, for a wide range of parameter values, countries converge to a common growth rate, with relative productivities depending on the speed with which countries adopt technologies developed at home and abroad. Using parameter values that fit a cross section of data on productivity, research, and patenting, we simulate the growth of the five countries, given initial productivity levels in 1950 and research efforts in the subsequent four decades. Based on plausible assumptions about 'technology gaps' that existed among these countries in 1950 we can explain their growth experiences quite successfully. Specifically, the simulations capture the magnitude of the slowdown in German, French, and Japanese productivity growth and the relative constancy of U.K. and U.S. growth.

Suggested Citation

Eaton, Jonathan and Kortum, Samuel S., Engines of Growth: Domestic and Foreign Sources of Innovation (August 1995). NBER Working Paper No. w5207. Available at SSRN: https://ssrn.com/abstract=225271

Jonathan Eaton (Contact Author)

Leonard N. Stern School of Business - Department of Economics ( email )

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Samuel S. Kortum

University of Chicago - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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