Promoting innovation and imitation in a small open economy: The role of human capital, R&D and trade

Brita Bye and Taran FæHn

No 332158, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: For small and open economies, absorption of knowledge spillovers from abroad can play a more important role for domestic growth than domestic innovations. However, there are interrelations between innovation and imitation processes, as they both depend on domestic investments in human capital and R&D, as well as trade. This article explores the implications for the desirable growth policy design when R&D policies, trade promotion and education simultaneously affect both innovation and absorption of knowledge spillovers from abroad. We find that devoting similar public funding to R&D, R&D based export or education all stimulate innovation as well as absorption. But the industrial pattern and the relative roles of imitation and innovation processes for productivity growth and welfare differ between the policy alternatives.

Keywords: Labor and Human Capital; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 37
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332158

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