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Openness, Intermediate Imports and Growth

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  • Andreas Kopp
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    Abstract

    We 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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    File URL: http://www.ifw-members.ifw-kiel.de/publications/openness-intermediate-imports-and-growth/kap996.pdf
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    Bibliographic Info

    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 996.

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    Length: 72 pages
    Date of creation: Aug 2000
    Date of revision:
    Handle: RePEc:kie:kieliw:996

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    Related research

    Keywords: North-South trade; FDI; intermediate goods;

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    1. Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    2. 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.
    3. J. Vernon Henderson, 1994. "Externalities and Industrial Development," NBER Working Papers 4730, National Bureau of Economic Research, Inc.
    4. Samuel S. Kortum & Jonathan Eaton, 1995. "Engines of growth: domestic and foreign sources of innovation," Finance and Economics Discussion Series 95-35, Board of Governors of the Federal Reserve System (U.S.).
    5. Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155.
    6. Eaton, Jonathan & Eckstein, Zvi, 1997. "Cities and growth: Theory and evidence from France and Japan," Regional Science and Urban Economics, Elsevier, vol. 27(4-5), pages 443-474, August.
    7. Jess Gaspar & Edward L. Glaeser, 1996. "Information Technology and the Future of Cities," Harvard Institute of Economic Research Working Papers 1756, Harvard - Institute of Economic Research.
    8. Duncan Black & Vernon Henderson, 1997. "Urban Growth," NBER Working Papers 6008, National Bureau of Economic Research, Inc.
    9. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
    10. 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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