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Economic Integration and Endogenous Growth Revisited: Pro-Competitive Gains from Trade in Goods and the Long Run Benefits to the Exchange of Ideas

Author

Listed:
  • Raul Barreto

    (School of Economics, University of Adelaide, Australia)

  • Kaori Kobayashi

    (School of Economics, University of Adelaide, Australia)

Abstract

This paper re-examines the Romer [1990] “knowledge driven” endogenous growth model in an open economy setting. As an alternative to Rivera-Batiz and Romer [1991], we consider trade between two absolutely identical countries that are characterized by imperfect competition in one of the trade goods. Contrary to Rivera- Batiz and Romer [1991], we find that trade in goods without trade in ideas is detrimental to long run growth while trade in goods in conjunction with trade in ideas is good for long run growth. We further demonstrate that the pro-competitive gains from trade in goods is analogous to the analysis of imperfect competition by standard international trade theory.

Suggested Citation

  • Raul Barreto & Kaori Kobayashi, 2003. "Economic Integration and Endogenous Growth Revisited: Pro-Competitive Gains from Trade in Goods and the Long Run Benefits to the Exchange of Ideas," Centre for International Economic Studies Working Papers 2003-16, University of Adelaide, Centre for International Economic Studies.
    • Handle: RePEc:adl:cieswp:2003-16
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    File URL: http://www.adelaide.edu.au/cies/papers/0316.pdf
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    References listed on IDEAS

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    1. Markusen, James R. & Melvin, James R. & Maskus, Keith E. & Kaempfer, William, 1995. "International trade: theory and evidence," MPRA Paper 21989, University Library of Munich, Germany.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "Economic Integration and Endogenous Growth," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.), International Trade, Capital Flows and Economic Development, chapter 1, pages 3-32, World Scientific Publishing Co. Pte. Ltd..
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    Keywords

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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