Time preference, productivity, and the growth effects of integration
AbstractTraditional trade theory emphasizes static gains form trade, whereas the growing literature on endogenous growth is able to explain dynamic gains from trade, i.e., how trade influences economic growth. Empirical studies suggest that dynamic gains are likely to be significantly more important than static gains. More recently, a debate has evolved around the question: do welfare improving effects of trade still prevail when countries are "unequal" in some sense? This paper extends the discussion by investigating how differences in time preference rates and R&D productivity under alternative assumptions concerning knowledge diffusion affect the effect growth. We show that even when a developing country completely looses competitiveness in R&D, it experiences positive welfare improving effects with opening trade.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 9607001.
Length: 25 pages
Date of creation: 11 Jul 1996
Date of revision:
Note: Type of Document - WordPerfect ; prepared on IBM PC ; to print on HP ; pages: 25 ; figures: included .
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economic growth; international trade; economic integration;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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