Horizontal Innovation in the Theory of Growth and Development

UPF Economics and Business Working Paper 831

65 Pages Posted: 29 Nov 2005

See all articles by Gino Gancia

Gino Gancia

Queen Mary University of London; Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI)

Fabrizio Zilibotti

Yale University; Centre for Economic Policy Research (CEPR)

Date Written: January 2005

Abstract

We analyze recent contributions to growth theory based on the model of expanding variety of Romer (1990). In the first part, we present different versions of the benchmark linear model with imperfect competition. These include the 'labequipment' model, labor-for-intermediates' and 'directed technical change'. We review applications of the expanding variety framework to the analysis of international technology diffusion, trade, cross-country productivity differences, financial development and fluctuations. In many such applications, a key role is played by complementarities in the process of innovation.

Keywords: Appropriate technology, complementarity, cycles, convergence, directed technical change, endogenous growth, expanding variety, financial development,imperfect competition, integration, innovation

JEL Classification: D92, E32, F12, F15, F43, G22, O11, O16, O31, O33

Suggested Citation

Gancia, Gino and Zilibotti, Fabrizio, Horizontal Innovation in the Theory of Growth and Development (January 2005). UPF Economics and Business Working Paper 831, Available at SSRN: https://ssrn.com/abstract=859364 or http://dx.doi.org/10.2139/ssrn.859364

Gino Gancia (Contact Author)

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Fabrizio Zilibotti

Yale University ( email )

New Haven, CT 06520
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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