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Trade and the accumulation and diffusion of knowledge

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  • Padoan, Pier Carlo
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    Abstract

    The author examines the properties of a dynamic disequilibrium model focused on trade specialization and the accumulation of knowledge. Steady state analysis shows that: a) under perfectly balanced growth international diffusion of knowledge is irrelevant for growth; and b) under unbalanced growth, the process of structural change may be enhanced by the effects on the domestic accumulation of knowledge of domestic spillover. The growth of foreign knowledge has an ambivalent effect on domestic performance because it is both a complement to, and a substitute for, domestic knowledge. Whenever these two effects do not perfectly match, the diffusion of international knowledge is associated with unbalanced growth. Imports of knowledge intensive goods may not lead to higher growth unless there is sufficiently strong trade performance in the knowledge -intensive sectors. Unbalanced growth is also associated with"output catching up"."Technological catching up"is necessary but not sufficient for balanced growth. Parameter estimates were obtained for France, Germany, Italy, Japan, and the United Kingdom. Results appear to be consistent with theoretical expectations about the importance of"price"and"nonprice"determinants of trade performance in the four sectors as well as with the distribution of revealed comparative advantages. Simulation exercises confirm steady-state results on the relevance of country differences in trade specialization and in the domestic accumulation of knowledge as they affect growth. They also clarify the relationship between growth and changes in the structure of trade specialization.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1679.

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    Date of creation: 30 Nov 1996
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    Handle: RePEc:wbk:wbrwps:1679

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    Keywords: Health Monitoring&Evaluation; Environmental Economics&Policies; Public Health Promotion; Economic Theory&Research; Educational Sciences; Environmental Economics&Policies; Health Monitoring&Evaluation; Economic Theory&Research; Educational Sciences; Innovation;

    References

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    1. Wolfgang Keller, 1996. "Are International R&D Spillovers Trade-related? Analyzing Spillovers among Randomly Matched Trade Partners," International Trade 9608002, EconWPA.
    2. Antoine Magnier & Joël Toujas-Bernate, 1994. "Technology and trade: Empirical evidences for the major five industrialized countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(3), pages 494-520, September.
    3. Coe, David T & Helpman, Elhanan, 1993. "International R&D Spillovers," CEPR Discussion Papers 840, C.E.P.R. Discussion Papers.
    4. Freeman, Chris & Hagedoorn, John, 1994. "Catching up or falling behind: Patterns in international interfirm technology partnering," World Development, Elsevier, vol. 22(5), pages 771-780, May.
    5. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
    6. Elhanan Helpman & David T. Coe & Alexander W. Hoffmaister, 1994. "North-South RandD Spillovers," IMF Working Papers 94/144, International Monetary Fund.
    7. Carter, Richard A. L. & Nagar, Anirudh L., 1977. "Coefficients of correlation for simultaneous equation systems," Journal of Econometrics, Elsevier, vol. 6(1), pages 39-50, July.
    8. Elhanan Helpman & David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 93/84, International Monetary Fund.
    9. Ben-David, Dan & Loewy, Michael B, 1995. "Free Trade and Long-Run Growth," CEPR Discussion Papers 1183, C.E.P.R. Discussion Papers.
    10. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
    11. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    12. Fagerberg, Jan, 1988. "International Competitiveness," Economic Journal, Royal Economic Society, vol. 98(391), pages 355-74, June.
    13. Grossman, G.M. & Helpman, E., 1989. "Growth And Welfare In A Small Open Economy," Papers 15-89, Tel Aviv.
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    Cited by:
    1. Padoan, Pier Carlo, 1998. "Trade, knowledge accumulation and diffusion: A sectoral perspective1," Structural Change and Economic Dynamics, Elsevier, vol. 9(3), pages 349-372, September.

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