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Product cycles and growth cycles

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  • Iwaisako, Tatsuro
  • Tanaka, Hitoshi

Abstract

This paper theoretically shows that shifts in production from developed countries (the North) to developing countries (the South) through imitation by the South can cause endogenous growth cycles. On the equilibrium path, the world economy continues to grow, but innovation, imitation, and the growth rate may permanently fluctuate. To show this, we construct a two-country overlapping generations model where the North develops new goods and the South imitates these goods endogenously. A key assumption is international knowledge spillover in the imitation process. The model implies that growth cycles tend to emerge when imitation in the South is more active.

Suggested Citation

  • Iwaisako, Tatsuro & Tanaka, Hitoshi, 2017. "Product cycles and growth cycles," Journal of International Economics, Elsevier, vol. 105(C), pages 22-40.
  • Handle: RePEc:eee:inecon:v:105:y:2017:i:c:p:22-40
    DOI: 10.1016/j.jinteco.2016.11.004
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    More about this item

    Keywords

    Product cycles; Imitation; Endogenous cycles; Intellectual property rights protection;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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