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Learning by Doing, Trade in Capital Goods and Growth

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  • Ai Ting Goh

    (National University of Singapore)

  • Jacques Olivier

    (National University of Singapore)

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    Abstract

    This 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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    Bibliographic Info

    Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0854.

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    Date of creation: 01 Aug 2000
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    Handle: RePEc:ecm:wc2000:0854

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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, vol. 87(2), pages 253-66, April.
    2. Rivera-Batiz, Luis A & Romer, Paul M, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 531-55, May.
    3. 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.
    4. Boyan Jovanovic, 1995. "Learning and Growth," NBER Working Papers 5383, National Bureau of Economic Research, Inc.
    5. Egan, Mary Lou & Mody, Ashoka, 1992. "Buyer-seller links in export development," World Development, Elsevier, vol. 20(3), pages 321-334, March.
    6. Harrison, Ann, 1996. "Openness and growth: A time-series, cross-country analysis for developing countries," Journal of Development Economics, Elsevier, vol. 48(2), pages 419-447, March.
    7. 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 C95-050, University of California at Berkeley.
    8. Charles I. Jones, 1997. "On the Evolution of the World Income Distribution," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 19-36, Summer.
    9. 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, vol. 23(2), pages 249-274, October.
    10. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
    11. Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
    12. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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