Innovation, Product-Cycle Trade, and the Cross-Country Distribution of Income

Scott French

No 2014-26, Discussion Papers from School of Economics, The University of New South Wales

Abstract: This paper develops a quantitative, multi-country model of endogenous growth, international trade, and international knowledge flows in order to understand how access to both foreign products and technologies, together, influences innovation incentives and the world distribution of income. An endogenous product cycle arises in equilibrium, in which innovative countries engage in both horizontal and vertical research, while others far from the technological frontier specialize in learning about and applying research previously conducted abroad. The effect of trade barriers on the level and dispersion of income across countries is found to be larger than would be predicted by a static trade model, and the effect of access to international knowledge flows is also quantitatively important and dependent on trade flows. For instance, halving the cost of learning reduces income dispersion by 23%, while doing so after eliminating asymmetric international trade barriers reduces income dispersion by only 10%.

Keywords: Income differences; Trade; Endogenous growth; Product cycle; Innovation; Productivity; Technology diffusion (search for similar items in EconPapers)
JEL-codes: F11 F12 F14 O19 O31 O33 O40 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2014-05
New Economics Papers: this item is included in nep-gro, nep-ino, nep-int, nep-knm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://research.economics.unsw.edu.au/RePEc/papers/2014-26.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Unavailable: Back-end server is at capacity

Related works:
Working Paper: Innovation, Product-Cycle Trade, and the Cross-Country Distribution of Income (2015)
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:swe:wpaper:2014-26

Access Statistics for this paper

More papers in Discussion Papers from School of Economics, The University of New South Wales Contact information at EDIRC.
Bibliographic data for series maintained by Hongyi Li ().