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Sustained Comparative Advantage and Semi-Endogenous Growth

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  • Petsas, Iordanis

Abstract

This paper constructs a two-country (Home and Foreign) general equilibrium model of Schumpeterian growth without scale effects. The scale effects property is removed by introducing a distinct specification in the knowledge production function which generates semi-endogenous growth. In this model of semi-endogenous growth, an increase in the rate of population growth rate raises Home’s relative wage and lowers its range of goods exported to Foreign. An increase in the size of innovations increases Home’s relative wage but with an ambiguous effect on its comparative advantage. The model generates a unique steady-state equilibrium in which there is complete specialization in both goods and R&D production within each country.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14297.

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Date of creation: Jan 2009
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Handle: RePEc:pra:mprapa:14297

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Keywords: Comparative advantage; Trade; Schumpeterian growth; Scale effects; R&D races;

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  1. Grossman, G.M. & Helpman, E., 1989. "Endogenous Prduct Cycles," Papers, Princeton, Woodrow Wilson School - Public and International Affairs 144, Princeton, Woodrow Wilson School - Public and International Affairs.
  2. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, American Economic Association, vol. 88(5), pages 1290-1310, December.
  3. Taylor, M. Scott, 1993. "'Quality ladders' and Ricardian trade," Journal of International Economics, Elsevier, Elsevier, vol. 34(3-4), pages 225-243, May.
  4. Elias Dinopoulos & Constantinos Syropoulos, 2004. "Globalization, Factor Endowments,and Scale-Invariant Growth," Working Papers, Florida International University, Department of Economics 0409, Florida International University, Department of Economics.
  5. Petsas, Iordanis, 2009. "Sustained Comparative Advantage and Semi-Endogenous Growth," MPRA Paper, University Library of Munich, Germany 14297, University Library of Munich, Germany.
  6. Chol-Won Li, 1998. "Endogenous Growth Without Scale Effects: Comment," Working Papers, Business School - Economics, University of Glasgow 9819, Business School - Economics, University of Glasgow.
  7. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers, National Bureau of Economic Research, Inc 3099, National Bureau of Economic Research, Inc.
  8. Grossman, Gene M & Helpman, Elhanan, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 106(2), pages 557-86, May.
  9. Peretto, Pietro F, 1998. " Technological Change and Population Growth," Journal of Economic Growth, Springer, Springer, vol. 3(4), pages 283-311, December.
  10. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 178, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Petsas, Iordanis, 2008. "Sustained Comparative Advantage in a Model of Schumpeterian Growth without Scale Effects," MPRA Paper, University Library of Munich, Germany 14300, University Library of Munich, Germany, revised 30 Sep 2008.
  12. Dinopoulos, Elias & Thompson, Peter, 1998. " Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, Springer, vol. 3(4), pages 313-35, December.
  13. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 37(1), pages 112-156, March.
  14. Grossman, G.M. & Helpman, E., 1989. "Endogemour Product Cycles," Papers, Tel Aviv 10-89, Tel Aviv.
  15. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, Econometric Society, vol. 65(6), pages 1389-1420, November.
  16. Chui, Michael, et al, 2002. " North-South Models of Growth and Trade," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 16(2), pages 123-65, April.
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Citations

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Cited by:
  1. Iordanis Petsas, 2010. "Sustained Comparative Advantage and Semi-Endogenous Growth," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 14(1), pages 34-47, 02.
  2. Mitchell H. Kellman & Yochanan Shachmurove, 2011. "Herfindahl-Hirschman Meets International Trade and Development Theories," Working Papers, Department of Applied Econometrics, Warsaw School of Economics 50, Department of Applied Econometrics, Warsaw School of Economics.
  3. Mitchell H. Kellman & Yochanan Shachmurove, 2010. "Adam Smith Meets an Index of Specialization in International Trade," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 10-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  4. Teng, Faxin & Kamenev, Dmitry & Meier, Claudia & Klein, Martin, 2011. "Trade integration, restructuring and global imbalances: A tale of two countries," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO) 16, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO).

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