Global Innovation and Knowledge Diffusion

Nelson Lind and Natalia Ramondo

No 17385, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a Ricardian model of trade in which countries innovate ideas that diffuse globally. The forces of innovation and diffusion combine to shape expenditure substitution patterns. Innovation makes a country technologically distinct, reducing their substitutability with other countries, while diffusion generates technological similarity and increases head-to-head competition. In the special case of an innovation-only model where countries do not share ideas, productivities are independent across space, and expenditure is CES. Consequently, departures from CES expenditure reveal diffusion patterns. Our theoretical results provide a mapping between the dynamics of observable expenditure and the dynamics of innovation and knowledge diffusion.

Keywords: Innovation; Diffusion; Poisson processes; Frechet distribution; Generalized extreme value; International trade (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2022-06
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Related works:
Journal Article: Global Innovation and Knowledge Diffusion (2023)
Working Paper: Global Innovation and Knowledge Diffusion (2022)
Working Paper: Global Innovation and Knowledge Diffusion (2019)
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