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Learning and knowledge diffusion in a global economy

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  • Dasgupta, Kunal

Abstract

I develop a dynamic general equilibrium model to understand how multinationals affect host countries through knowledge diffusion. Workers in the model learn from their managers and knowledge diffusion takes place through worker mobility. Unlike in a model without learning, I present a novel mechanism through which an integrated equilibrium represents a Pareto improvement for the host country. I go on to explore other dynamic consequences of integration. The entry of multinationals makes the lifetime earning profiles of host country workers steeper. At the same time, if agents learn fast enough, integration creates unequal opportunities, thereby widening inequality. The ex-workers of foreign multinationals also found new firms which are, on average, larger than the largest firms under autarky.

Suggested Citation

  • Dasgupta, Kunal, 2012. "Learning and knowledge diffusion in a global economy," Journal of International Economics, Elsevier, vol. 87(2), pages 323-336.
  • Handle: RePEc:eee:inecon:v:87:y:2012:i:2:p:323-336 DOI: 10.1016/j.jinteco.2011.11.012
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    Cited by:

    1. Grigorios Spanos, 2015. "Sorting Within and Across French Production Hierarchies," AMSE Working Papers 1524, Aix-Marseille School of Economics, Marseille, France.
    2. Jaan Masso & Priit Vahter, 2016. "Knowledge Transfer From Multinationals Through Labour Mobility: Learning From Export Experience," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 99, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    3. Stoyanov, Andrey & Zubanov, Nikolay, 2014. "The distribution of the gains from spillovers through worker mobility between workers and firms," European Economic Review, Elsevier, vol. 70(C), pages 17-35.
    4. Sampson, Thomas, 2013. "Brain drain or brain gain? Technology diffusion and learning on-the-job," Journal of International Economics, Elsevier, pages 162-176.
    5. Sampson, Thomas, 2012. "Brain drain or brain gain? Technology diffusion and learning on-the-job," LSE Research Online Documents on Economics 51503, London School of Economics and Political Science, LSE Library.
    6. Serafinelli, Michel, 2013. "Good Firms, Worker Flows and Productivity," MPRA Paper 49055, University Library of Munich, Germany, revised 12 Aug 2013.
    7. Stockinger, Bastian & Wolf, Katja, 2016. "The productivity effects of worker mobility between heterogeneous firms," IAB Discussion Paper 201607, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Michel Serafinelli, 2015. "'Good' Firms, Worker Flows and Local Productivity," Working Paper series 15-29, Rimini Centre for Economic Analysis.
    9. Patnaik, Ila & Pundit, Madhavi, 2014. "Is India's Long-Term Trend Growth Declining?," ADB Economics Working Paper Series 424, Asian Development Bank.
    10. Michaud, Amanda & Rothert, Jacek, 2014. "Optimal borrowing constraints and growth in a small open economy," Journal of International Economics, Elsevier, pages 326-340.
    11. Stoyanov, Andrey & Zubanov, Nick, 2013. "Money on the Table? Firms' and Workers' Gains from Productivity Spillovers through Worker Mobility," IZA Discussion Papers 7702, Institute for the Study of Labor (IZA).
    12. Nimczik, Jan Sebastian, 2017. "Job Mobility Networks and Endogenous Labor Markets," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168147, Verein für Socialpolitik / German Economic Association.
    13. Stockinger, Bastian & Wolf, Katja, 2016. "The productivity effects of worker mobility between heterogeneous firms," IAB Discussion Paper 201607, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    14. Liu, Qing & Lu, Ruosi & Zhang, Chao, 2014. "Entrepreneurship and spillovers from multinationals: Evidence from Chinese private firms," China Economic Review, Elsevier, vol. 29(C), pages 95-106.
    15. Thomas Sampson, 2012. "Brain Drain or Brain Gain? Technology Diffusion and Learning On-the-job," CEP Discussion Papers dp1168, Centre for Economic Performance, LSE.
    16. David Kendrick & George Shoukry, 2014. "Quarterly Fiscal Policy Experiments with a Multiplier-Accelerator Model," Computational Economics, Springer;Society for Computational Economics, vol. 44(3), pages 269-293, October.
    17. Grigorios Spanos, 2015. "Sorting Within and Across French Production Hierarchies," Working Papers halshs-01163607, HAL.
    18. Patnaik, Ila & Pundit, Madhavi, 2016. "Where is India's Growth Headed?," Working Papers 16/159, National Institute of Public Finance and Policy.
    19. Ila Patnaik, 2016. "Where is India’s Growth Headed?," Working Papers id:8436, eSocialSciences.

    More about this item

    Keywords

    Multinationals; Knowledge diffusion; Learning; Worker mobility; Pareto improvement; Spin-offs;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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