Open Economy Schumpeterian Growth

Raul Barreto and Kaori Kobayashi
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Kaori Kobayashi: School of Economics, University of Adelaide, Australia

No 2003-17, Centre for International Economic Studies Working Papers from University of Adelaide, Centre for International Economic Studies

Abstract: This paper examines the Aghion and Howitt [1992] “creative destruction” endogenous growth model in an open economy setting. We consider four alternative trade regimes. The first two regimes allow the monopoly producer of the intermediate good to attain worldwide monopoly rents. In the first of the two, the countries engage in trade of only the imperfectly produced intermediate good. In the second, the two countries trade in both the intermediate good as well as in ideas. The last two regimes consider two countries which are identical before and after trade opens such that pro-competitive gains from trade are achieved. We again consider when only intermediaries may be traded and thereafter when both intermediaries and ideas may be traded. We find that the effects of trade on growth and welfare depend critically on the assumptions one imposes.

Keywords: Creative Destruction; Obsolescence; Endogenous Growth; International Trade; Imperfect Competition; Schumpeterian Growth (search for similar items in EconPapers)
JEL-codes: F12 F15 F43 O30 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2003-05
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Working Paper: Open Economy Schumpeterian Growth (2001)
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