The Global Diffusion of Ideas

69 Pages Posted: 12 Jan 2016 Last revised: 9 Sep 2021

See all articles by Francisco J. Buera

Francisco J. Buera

Washington University in St. Louis; National Bureau of Economic Research (NBER)

Ezra Oberfield

Princeton University

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Date Written: January 2016

Abstract

We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.

Suggested Citation

Buera, Francisco J. and Oberfield, Ezra, The Global Diffusion of Ideas (January 2016). NBER Working Paper No. w21844, Available at SSRN: https://ssrn.com/abstract=2713548

Francisco J. Buera (Contact Author)

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ezra Oberfield

Princeton University ( email )

Princeton, NJ 08544-1021
United States

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