R&D, Openness, and Growth

Pei-Pei Chen (pei-pei.chen@standardbank.co.za) and Rangan Gupta
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Pei-Pei Chen: Department of Economics, University of Pretoria

No 200623, Working Papers from University of Pretoria, Department of Economics

Abstract: Recent studies have pointed out that trade liberalisation leads to technological spillovers, which, in turn, tend to improve the efficiency of the domestic Research and Development (R&D) sector, and ultimately boost economic growth. In this paper, we theoretically formalize the above mentioned relationship between trade openness and growth via technological and knowledge spill over in the R&D sector. We show that, under certain conditions, an increase in the degree of openness is not only growth enhancing, but also improves the standard of living. The study, thus, prescribe policies of developing and improving the domestic R&D sector in order to reap the full benefits of trade liberalisation.

Keywords: Trade Openness; Growth; Research and Development (search for similar items in EconPapers)
JEL-codes: F43 O32 O41 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2006-12
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:200623

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