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Horizontal Innovation in the Theory of Growth and Development

In: Handbook of Economic Growth

  • Gancia, Gino
  • Zilibotti, Fabrizio

We analyze recent contributions to growth theory based on the model of expanding variety of Romer [Romer, P. (1990). "Endogenous technological change". Journal of Political Economy 98, 71-102]. In the first part, we present different versions of the benchmark linear model with imperfect competition. These include the "lab-equipment" model, "labor-for-intermediates" and "directed technical change". We review applications of the expanding variety framework to the analysis of international technology diffusion, trade, cross-country productivity differences, financial development and fluctuations. In many such applications, a key role is played by complementarities in the process of innovation.

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This chapter was published in:
  • Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1, June.
  • This item is provided by Elsevier in its series Handbook of Economic Growth with number 1-03.
    Handle: RePEc:eee:grochp:1-03
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