Gains and Losses from International Trade in a Knowledge-driven Semi-endogenous Growth Model with Heterogeneous Firms

katsufumi, fukuda (2012): Gains and Losses from International Trade in a Knowledge-driven Semi-endogenous Growth Model with Heterogeneous Firms.

Abstract

We consider a semi endogenous R&D growth model with international trade, firm heterogeneity, and local knowledge spillover in a closed economy and international knowledge spillover in a symmetric two country economy. We show that by opening trade R&D difficulty (the number of varieties produced) and welfare are ambiguously affected. When the international spillover is large (small), the former is increased (decreased). When the size of the international knowledge spillover is large (small) or the size of the international knowledge spillover is small and the size of intertemporal knowledge spillover is small (large), the latter increases (decreses). Without intertemporal and international knowledge spillovers, welfare increases.

• Item Type: MPRA Paper
• Language: English
• Keywords: Heterogeneous Firms, Semi Endogenous Growth, Gains and Losses from International Trade
• Subjects: F - International Economics > F1 - Trade > F15 - Economic Integration; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General; F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

References

[1] Baldwin, Richard. and Forslid Robert-Nicoud, “Trade and Growth with Heterogeneous Firms,” Journal of International Economics, 74, 2008, pp. 21-34.

[2] Dinopoulos, Elias. and Bulent Unel, “Quality Heterogeneity and Global Economic Growth,” European Economic Review, 55, 2011, pp. 595-612.

[3] -------------------------------------------, “A Simple Model of Quality Heterogeneity and International Trade,” mimeo, 2010.

[4] Dinopoulos, Elias and Fuat Sener, "New Directions in Schumpeterian Growth Theory," In: H. Hanush, and A. Pyka, Ed., Elgar Companion to Neo-Schumpeterian Economics, Edward Elgar Publishing Limited, Cheltenham, 2007. pp. 688-704.

[5] Dinopoulos, Elias and Constantions Syropoulos, “Rent Protection as Barrier to Innovation and Growth,” Economic Theory, 32, 2007, pp. 309-332.

[6] Dinopoulos, Elias and Peter Thompson, “Schumpeterian Growth Without Scale Effects,” Journal of Economic Growth, 3, 1998, pp. 313-335.

[7] Dinopoulos, Elias and Peter Thompson, “Scale Effects in Schumpeterian Gowth Mdels of Eonomic Gowth,” Journal of Evolutionary Economics, 9, 1999, pp. 157-185.

[8] Grossman, Gene and Elhanan Helpman, Innovation and Growth in the Global Economy, MIT Press, 1991.

[9] Gustafsson, Peter and Paul Segerstrom, “Trade Liberalization and Productivity Growth,” Review of International Eonomics, 18, 2010, pp. 207-228.

[10] Jones, Charles., “R & D-Based Models of Economic Growth,” Journal of Political Economy 103, 1995a, pp. 759-784.

[11] -------, “Time Series Tests of Endogenous Growth Models,” Quarterly Journal of Economics, 110, 1995b, pp. 495-525.

[12] -------, C. I. Jones, "Growth and Ideas," In: P. Aghion and S.N. Durlauf, Ed., Handbook of Economic Growth, North-Holland, Amsterdam, 2005, pp. 1063-1111.

[13] Melitz, Marc. J., “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity,” Econometrica, 71, 2003, pp. 1695-1725.

[14] Segerstrom, Paul., “Endogenous Growth without Scale,” American Economic Review, 88, 1998, pp. 1290-1310.

[15] Unel, Bulent, “Technology Diffusion through Trade with Heterogeneous Firms,” Review of International Economics, 18, 2010, pp. 465-481.