Export-Led Takeoff in a Schumpeterian Economy

Chu, Angus C. and Peretto, Pietro and Xu, Rongxin (2022): Export-Led Takeoff in a Schumpeterian Economy.

Abstract

This study develops an open-economy Schumpeterian growth model with endogenous takeoff to explore the effects of exports on the transition of an economy from stagnation to innovation-driven growth. We find that a higher export demand raises the level of employment, which causes a larger market size and an earlier takeoff along with a higher transitional growth rate of domestic output per capita but has no effect on long-run economic growth. These theoretical results are consistent with empirical evidence that we document using cross-country panel data in which the positive effect of exports on economic growth becomes smaller, as countries become more developed, and eventually disappears. We also calibrate the model to data in China and find that its export share increasing from 4.6% in 1978 to 36% in 2006 causes a rapid growth acceleration, but the fall in exports after 2007 causes a growth deceleration that continues until recent times.

• Item Type: MPRA Paper
• Language: English
• Keywords: international trade; innovation; endogenous takeoff
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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