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R&D, Openness, and Growth

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  • Pei-Pei Chen

    ()
    (Department of Economics, University of Pretoria)

  • Rangan Gupta

    ()
    (Department of Economics, University of Pretoria)

Abstract

Recent studies have pointed out that trade liberalisation leads to technological spillovers, which, in turn, tend to improve the efficiency of the domestic Research and Development (R&D) sector, and ultimately boost economic growth. In this paper, we theoretically formalize the above mentioned relationship between trade openness and growth via technological and knowledge spill over in the R&D sector. We show that, under certain conditions, an increase in the degree of openness is not only growth enhancing, but also improves the standard of living. The study, thus, prescribe policies of developing and improving the domestic R&D sector in order to reap the full benefits of trade liberalisation.

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Bibliographic Info

Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 200623.

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Length: 13 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:pre:wpaper:200623

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Keywords: Trade Openness; Growth; Research and Development;

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