Engines of Growth: Domestic and Foreign Sources of Innovation

Posted: 20 Sep 1996

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)

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Date Written: Undated

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 suggests that these countries grew as they did because of their ability to adopt more productive technologies, not because of capital deepening {\it 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.

JEL Classification: F43, O14, O31, O34, O40

Suggested Citation

Eaton, Jonathan and Kortum, Samuel S., Engines of Growth: Domestic and Foreign Sources of Innovation (Undated). FEDS Paper Number 95-35. Available at SSRN: https://ssrn.com/abstract=4240

Jonathan Eaton

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

269 Mercer Street
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HOME PAGE: http://www.econ.nyu.edu/user/eatonj/

National Bureau of Economic Research (NBER)

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Samuel S. Kortum (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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