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Effects of trade liberalization on growth and welfare through basic and applied researches

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  • Fukuda, Katsufumi

Abstract

This paper constructs a trade and growth model with firm heterogeneity, and basic and applied (technological) researches. It considers R&D activities of basic science conducted by the government using asset income tax and applied technology conducted by profit-maximizing firms to re-analyze the effect of trade liberalization on growth and welfare. It shows that trade liberalization elevates the growth rate, if the population size is small in an exogenous international spillover and endogenous growth model with firm heterogeneity. Moreover, it shows that the same condition is sufficient for welfare gain through further exposure to trade.

Suggested Citation

  • Fukuda, Katsufumi, 2019. "Effects of trade liberalization on growth and welfare through basic and applied researches," Journal of Macroeconomics, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:jmacro:v:62:y:2019:i:c:s0164070417305852
    DOI: 10.1016/j.jmacro.2018.08.011
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    References listed on IDEAS

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    2. Gnangnon, Sèna Kimm, 2020. "Tariff Volatility and Tariff Policy in Developed and Developing Countries," EconStor Preprints 223302, ZBW - Leibniz Information Centre for Economics.
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    4. Gnangnon, Sèna Kimm, 2021. "Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Growth in Beneficiary Countries," EconStor Preprints 242848, ZBW - Leibniz Information Centre for Economics.

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    More about this item

    Keywords

    Trade liberalization; Heterogeneous firm; Basic and applied research; Endogenous growth model;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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