Openness, Intermediate Imports and Growth
AbstractWe consider two channels via which foreign inputs into industrial production may lead to productivity effects. The first one concerns dynamic externalities between firms which share technical and organizational knowledge which is vital for the productivity growth of a particular industry. We show by which institutional mechanism firms are able to share proprietary knowledge which is of economic value for the competitor. An increase of the number of cooperating firms due to foreign direct investments leads to growth effects. The second channel of growth effects resulting from openness is derived from an increase of the imports of physical inputs due to a greater variety of inputs for final goods production.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 996.
Length: 72 pages
Date of creation: Aug 2000
Date of revision:
North-South trade; FDI; intermediate goods;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
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