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Engines of growth: Domestic and foreign sources of innovation

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  • Eaton, Jonathan
  • Kortum, Samuel

Abstract

We examine productivity growth since World War II in the five leading research economies: West Germany, France, the United Kingdom, Japan, and the United States. Available data on the capital-output ratio suggests that these countries grew as they did because of their ability to adopt more productive technologies, not because of capital deepening per se. We present a multicountry model of tech- nological innovation and diffusion which has the implication that, for a wide range of parameter values, countries converge to a common growth rate, with relative productivities depending on the speed with which countries adopt technologies developed at home and abroad. Using parameter values that fit a cross section of data on productivity, research, and patenting, we simulate the growth of the five countries, given initial productivity levels in 1950 and research efforts in the sub- sequent four decades. Based on plausible assumptions about "technology gaps" that existed among these countries in 1950 we can explain their growth experi- ences quite successfully. Specifically, the simulations capture the magnitude of the slowdown in German, French, and Japanese productivity growth and the relative constancy of U.K. and U.S. growth.

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Bibliographic Info

Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 9 (1997)
Issue (Month): 2 (May)
Pages: 235-259

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Handle: RePEc:eee:japwor:v:9:y:1997:i:2:p:235-259

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Web page: http://www.elsevier.com/locate/inca/505557

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References

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  1. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
  2. Johnson, G.E. & Stafford, F.P., 1993. "International Competition and Real Wages," Working Papers 323, Research Seminar in International Economics, University of Michigan.
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