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On the Growth Effects of Import Competition

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  • Richard E. Baldwin

Abstract

This paper shows that the market structure of an economy's research sector is an important determinant of the aggregate growth rate, even though it has hereto been ignored in the new growth literature. To make this point in a concrete context, a simple model is used to show that import competition may stimulate growth by reducing the market power of domestic innovators. Specifically, import competition forces domestic innovators to chose between either quickening their pace of innovation or being displaced by foreign innovators. The pro-growth effect of import competition is shown to be welfare-increasing. The paper studies a number of policy implications including the growth effects of anti-trust policy, partial liberalization and trade in intellectual property rights.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4045.

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Date of creation: Apr 1992
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Handle: RePEc:nbr:nberwo:4045

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  1. Feenstra, Robert C., 1996. "Trade and uneven growth," Journal of Development Economics, Elsevier, vol. 49(1), pages 229-256, April.
  2. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
  3. Shleifer, Andrei, 1986. "Implementation Cycles," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1163-90, December.
  4. Richard Baldwin, 1989. "Measureable Dynamic Gains from Trade," NBER Working Papers 3147, National Bureau of Economic Research, Inc.
  5. Findlay, Ronald, 1974. "Relative Prices, Growth and Trade in a Simple Ricardian System," Economica, London School of Economics and Political Science, vol. 41(161), pages 1-13, February.
  6. Stiglitz, Joseph E, 1970. "Factor Price Equalization in a Dynamic Economy," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 456-88, May-June.
  7. Deardorff, Alan V, 1973. "The Gains from Trade in and out of Steady-state Growth," Oxford Economic Papers, Oxford University Press, vol. 25(2), pages 173-91, July.
  8. Smith, M A M, 1977. "Capital Accumulation in the Open Two-Sector Economy," Economic Journal, Royal Economic Society, vol. 87(346), pages 273-82, June.
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Citations

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Cited by:
  1. Baldwin, Richard & Forslid, Rikard, 1996. "Trade Liberalization and Endogenous Growth: A q-Theory Approach," CEPR Discussion Papers 1397, C.E.P.R. Discussion Papers.
  2. Martin Neil Baily & Robert M. Solow, 2001. "International Productivity Comparisons Built from the Firm Level," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 151-172, Summer.
  3. Dan Ben-David & Michael B. Loewy, 1997. "Free Trade, Growth, and Convergence," NBER Working Papers 6095, National Bureau of Economic Research, Inc.
  4. Richard E. Baldwin & Elena Seghezza, 1996. "Trade-Induced Investment-led Growth," NBER Working Papers 5582, National Bureau of Economic Research, Inc.
  5. Larry E. Jones & Rodolfo E. Manuelli, 1994. "The Sources of Growth," Macroeconomics 9411002, EconWPA, revised 05 Mar 1999.
  6. Hiemenz, Ulrich (Ed.) & Gundlach, Erich (Ed.), 1994. "Regional integration in Europe and its effects on developing countries," Open Access Publications from Kiel Institute for the World Economy 794, Kiel Institute for the World Economy (IfW).
  7. Pistoresi, Barbara & Rinaldi, Alberto, 2012. "Exports, imports and growth," Explorations in Economic History, Elsevier, vol. 49(2), pages 241-254.
  8. Robert Z. Lawrence & David E. Weinstein, 1999. "Trade and Growth: Import-Led or Export-Led? Evidence From Japan and Korea," NBER Working Papers 7264, National Bureau of Economic Research, Inc.
  9. Baldwin, Richard E. & Seghezza, Elena, 1996. "The New Growth Theory: Its Logic and Trade Policy Implications," 1996: Implications of the New Growth Theory to Agricultural Trade Research and Trade Policy Conference, December 1996, Washington DC 50862, International Agricultural Trade Research Consortium.

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