Global Innovation and Knowledge Diffusion

Nelson Lind and Natalia Ramondo

American Economic Review: Insights, 2023, vol. 5, issue 4, 494-510

Abstract: We develop a Ricardian model of trade where countries innovate ideas that diffuse globally. Our key result provides necessary and sufficient conditions for innovation and diffusion to generate max-stable Fréchet productivity, linking generalized extreme value expenditure to knowledge flows. Innovation makes a country technologically distinct, reducing its substitutability with other countries. In contrast, diffusion generates technological similarity, increasing head-to-head competition and substitutability. In an innovation-only model where countries do not share ideas, productivities are independent across countries and expenditure is CES. Consequently, departures from CES reveal diffusion patterns.

JEL-codes: F11 O31 O33 O41 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Global Innovation and Knowledge Diffusion (2022)
Working Paper: Global Innovation and Knowledge Diffusion (2022)
Working Paper: Global Innovation and Knowledge Diffusion (2019)
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DOI: 10.1257/aeri.20220384

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