Phases of Imitation and Innovation in a North-South Endogenous Growth Model

CEPR Discussion Paper Series Number 1489

Posted: 10 Sep 1999

See all articles by Joseph Pearlman

Joseph Pearlman

London Metropolitan University - Department of Economics, Finance and International Business (EFIB)

Michael K.F. Chui

Bank for International Settlements (BIS)

Paul Levine

School of Economics, University of Surrey

Michelle Bush

London Business School

Date Written: October 1996

Abstract

In this paper, we develop a North-South endogenous growth model to examine three phases of development in the South: imitation of Northern products; imitation and innovation; and finally, innovation only. In particular, the model has the features of catching up (and potentially overtaking) which are of particular relevance to the Pacific Rim economies. We show that the possible equilibria depend on cross-country assimilation effects and the ease of imitation. We then apply the model to analyse the impact of R&D subsidies. There are some clear global policy implications which emerge from our analysis. First, because subsidies to Southern innovation benefit the North as well, it is beneficial to the North to pay for some of these subsidies. Second, because the ability of the South to assimilate Northern knowledge and innovate depends on Southern skills levels, the consequent spillover benefits on growth make the subsidizing of Southern education by the North particularly attractive.

JEL Classification: F43, O41

Suggested Citation

Pearlman, Joseph G. and Chui, Michael K.F. and Levine, Paul L. and Bush, Michelle, Phases of Imitation and Innovation in a North-South Endogenous Growth Model (October 1996). CEPR Discussion Paper Series Number 1489. Available at SSRN: https://ssrn.com/abstract=5171

Joseph G. Pearlman (Contact Author)

London Metropolitan University - Department of Economics, Finance and International Business (EFIB) ( email )

Economics Subject Group, LMBS
London EC2M 6SQ, EC2M 6SQ
United Kingdom

Michael K.F. Chui

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

Paul L. Levine

School of Economics, University of Surrey ( email )

Guildford
Surrey GU2 7XH
United Kingdom
+44 1483 259 380 Ext. 2773 (Phone)
+44 1483 259 548 (Fax)

Michelle Bush

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
0207 262 5050 (Phone)

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