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

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  • Chui, Michael
  • Currie, David
  • Levine, Paul L
  • Pearlman, Joseph

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. First, because subsidies to Southern innovation benefit the North as well, it is beneficial to the North to pay for some of these subsidies. Second, 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 subsidizing of Southern education by the North particularly attractive.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1489.

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Date of creation: Oct 1996
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Handle: RePEc:cpr:ceprdp:1489

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Keywords: Growth; Imitation; Innovation; Subsidies;

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  1. Klaus Waelde, 1994. "Transitional dynamics, convergence and international capital flows in two-country models of innovation and growth," International Trade, EconWPA 9403002, EconWPA, revised 06 Apr 1994.
  2. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  3. Stokey, Nancy L, 1995. "R&D and Economic Growth," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 62(3), pages 469-89, July.
  4. Helpman, Elhanan, 1993. "Innovation, Imitation, and Intellectual Property Rights," Econometrica, Econometric Society, Econometric Society, vol. 61(6), pages 1247-80, November.
  5. Gene M. Grossman & Elhanan Helpman, 1989. "Comparative Advantage and Long-Run Growth," NBER Working Papers 2809, National Bureau of Economic Research, Inc.
  6. Segerstrom, Paul S, 1991. "Innovation, Imitation, and Economic Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(4), pages 807-27, August.
  7. Chou, Chien-Fu & Shy, Oz, 1991. "A Model of Technology Gap, Product Cycle, and the Process of Catching Up between the North and the South," The Economic Record, The Economic Society of Australia, vol. 67(198), pages 217-26, September.
  8. Paul Krugman, 1989. "Is Bilateralism Bad?," NBER Working Papers 2972, National Bureau of Economic Research, Inc.
  9. Michael B. Devereux & Beverly J. Lapham, 1993. "The Stability of Economics Integration and Endogenous Growth," Working Papers, Queen's University, Department of Economics 878, Queen's University, Department of Economics.
  10. Dinopoulos, Elias & Oehmke, James F. & Segerstrom, Paul S., 1993. "High-technology-industry trade and investment : The role of factor endowments," Journal of International Economics, Elsevier, vol. 34(1-2), pages 49-71, February.
  11. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
  12. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(2), pages 495-525, May.
  13. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-91, December.
  14. Rivera-Batiz, Luis A. & Romer, Paul M., 1991. "International trade with endogenous technological change," European Economic Review, Elsevier, vol. 35(4), pages 971-1001, May.
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