A North-South Model with Technological Spillovers, Environmental Degradation and Structural Change

Abstract

In this paper we present and analyze a stylized model of endogenous growth with international technology spillover effects from the North to the South. The model allows for endogenous structural change and environmental degradation that reduces world output. We find that within this framework the costless technological spillovers foster structural change in both more and less advanced economies. Moreover, we can show that under technological spillovers the degradation of the environment is expected to be lower even without government interventions and we highlight the role of endogenous structural change in generating this outcome.

Keywords: Technological Spillovers, Endogenous Growth, Environmental Impact, Endogenous Structural Change, Creative Destruction

JEL Classification: Q55, Q58, O31, O34, O41