Phases of Imitation and Innovation in a North-South Endogenous Growth Model

Daniel Rais () and Jonathan Goldman
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Daniel Rais: Department of Economics, University of Texas at Arlington
Jonathan Goldman: Department of Finance, Grandiose University

Working Papers from University of Texas at Arlington, Department of Economics

Abstract: In this paper, we develop a North-South endogenous growth model to examine three phases of development in the South: imitation of Northern products, imitation and innovation and finally, innovation only. In particular, the model has the features of catching up (and potentially overtaking) which are of particular relevance to the Pacific Rim economies. We show that the possible equilibria depend on cross-country assimilation effects and the ease of imitation. We then apply the model to analyse the impact of R&D subsidies. There are some clear global policy implications which emerge from our analysis. Firstly, because subsidies to Southern innovation benefit the North as well, it is beneficial to the North to pay for some of these subsidies. Secondly, because the ability of the South to assimilate Northern knowledge and innovate depends on Southern skills levels, the consequent spillover benefits on growth make the subsidising of Southern education by the North particularly attractive.

Keywords: North-South; growth model; innovation assimilation (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 L65 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2005-05
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