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Learning by Doing, Trade in Capital Goods and Growth

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  • Goh, Ai-Ting

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; National University of Singapore)

  • Olivier, Jacques

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; National University of Singapore ; HEC School of Management ; CEPPR)

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    Abstract

    The paper aims at reconciling theoretical models of endogenous growth with the empirical evidence on trade and growth. In particular, we show that the conventional wisdom according to which trade is growth-impairing for a country with comparative advantage in goods with limited opportunities for learning fails to hold when the imported good is a capital good. The intuition is that the country gains access to cheaper capital goods, which raises investment, output per worker and learning by doing.

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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2001-2.pdf
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    Bibliographic Info

    Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2001002.

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    Length: 44
    Date of creation: 01 Jan 2001
    Date of revision:
    Handle: RePEc:ctl:louvir:2001002

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    Keywords: trade; capital goods; growth;

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    1. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(2), pages 253-66, April.
    2. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, Elsevier, vol. 48(2), pages 419-447, March.
    3. Rivera-Batiz, Luis A. & Romer, Paul M., 1991. "International trade with endogenous technological change," European Economic Review, Elsevier, Elsevier, vol. 35(4), pages 971-1001, May.
    4. Boyan Jovanovic, 1995. "Learning and Growth," NBER Working Papers 5383, National Bureau of Economic Research, Inc.
    5. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence," NBER Working Papers 7081, National Bureau of Economic Research, Inc.
    6. Egan, Mary Lou & Mody, Ashoka, 1992. "Buyer-seller links in export development," World Development, Elsevier, Elsevier, vol. 20(3), pages 321-334, March.
    7. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
    8. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, American Economic Association, vol. 82(4), pages 942-63, September.
    9. Jeffrey A. Frankel, David Romer and Teresa Cyrus., 1995. "Trade and Growth in East Asian Countries: Cause and Effect?," Center for International and Development Economics Research (CIDER) Working Papers, University of California at Berkeley C95-050, University of California at Berkeley.
    10. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
    11. Charles I. Jones, . "On the Evolution of the World Income Distribution," Working Papers, Stanford University, Department of Economics 97009, Stanford University, Department of Economics.
    12. Amsden, Alice H., 1986. "The direction of trade -- past and present -- and the learning effects of exports to different directions," Journal of Development Economics, Elsevier, Elsevier, vol. 23(2), pages 249-274, October.
    13. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, Elsevier, vol. 22(1), pages 3-42, July.
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