From Autarky to Integration: Imitation, Foreign Borrowing, and Growth

International Monetary Fund

No 1998/140, IMF Working Papers from International Monetary Fund

Abstract: The effects on growth of the integration of an autarkic country into the world economy are analyzed, focusing on the differing roles of imitation and innovation in human capital accumulation. The country initially concentrates on imitation of foreign knowledge; subsequently, as it approaches the knowledge frontier, innovation plays a greater role. Late developers catch up with the rest of the world more rapidly than early developers, reflecting the relatively large imitation opportunity available to them. Restrictions on foreign borrowing reduce the speed of adjustment to the steady state and lower growth and welfare for the country that imposes them.

Keywords: WP; interest rate; Growth; Imitation; Innovation; Knowledge Gap; Foreign Borrowing; accumulation function; mobility case; capital accumulation; capital mobility; Human capital; Capital controls; Consumption; Stocks; Global (search for similar items in EconPapers)
Pages: 35
Date: 1998-09-01
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1998/140

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