MARKETS, EXTERNALITIES, AND THE DYNAMIC GAINS OF OPENNESS

Alexander Monge‐Naranjo
Authors registered in the RePEc Author Service: Alexander Monge-Naranjo

International Economic Review, 2019, vol. 60, issue 3, 1131-1170

Abstract: Inflows of foreign knowledge are key for developing countries to catch up with the world technology frontier. I construct a model to analyze the entry decisions of foreign firms and the incentives of domestic firms to invest in their own know‐how, given the exposure to foreign ideas and competition. The model embeds two diffusion mechanisms typically considered separately in the literature: externalities and markets. I find that openness allows developing countries to fully catch up only when market transactions dominate the diffusion of ideas. Externalities are never enough to catch up and may lead to losses in income and welfare.

Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/iere.12381

Related works:
Working Paper: Markets, Externalities, and the Dynamic Gains of Openness (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:iecrev:v:60:y:2019:i:3:p:1131-1170

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Michael O'Riordan and Dirk Krueger

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().