Phases of Imitation and Innovation in a North-South Endogenous Growth Model
A North-South endogenous growth model is developed to examine three phases of Southern development: imitation of Northern products, imitation and innovation, and innovation only. The authors show that the three phases exist as possible equilibria that depend on knowledge spillovers and the ease of imitation. Applying the model to analyze the impact of R&D subsidies, there are some clear policy implications: (1) the welfare effects of subsidies in both blocs depend crucially on the Southern phase and (2) there are circumstances where the global benefits from subsidies to the South are so substantial as to be Pareto-improving even when fully financed by the North. Coauthors are Paul Levine, Joseph Pearlman, and Michael Chui. Copyright 1999 by Royal Economic Society.
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Volume (Year): 51 (1999)
Issue (Month): 1 (January)
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