Trade and Uneven Growth
34 Pages Posted: 25 Aug 2000 Last revised: 16 Dec 2022
Date Written: March 1990
Abstract
We consider trade between two countries of unequal size, where the creation of new intermediate inputs occurs in both. We assume that the knowledge gained from R&D in one country does not spillover to the other. Under autarky, the larger country would have a higher rate of product creation. When trade occurs in the final goods, we find that the smaller country has its rate of product creation stowed, even in the long run. In contrast, the larger country enjoys a temporary increase in its rate of R&D. We also examine the welfare consequences of trade in the final goods, which depend on whether the intermediate inputs are traded or not.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Learning by Doing and the Dynamic Effects of International Trade
By Alwyn Young
-
Quality Ladders in the Theory of Growth
By Gene M. Grossman and Elhanan Helpman
-
Quality Ladders and Product Cycles
By Gene M. Grossman and Elhanan Helpman
-
Comparative Advantage and Long-Run Growth
By Gene M. Grossman and Elhanan Helpman
-
By Gene M. Grossman and Elhanan Helpman
-
Capital Goods Imports and Long-Run Growth
By Jong-wha Lee
-
Employment Protection, International Specialization, and Innovation
-
Growth and Welfare in a Small Open Economy
By Gene M. Grossman and Elhanan Helpman