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Open Economy Schumpeterian Growth


  • Raul Barreto

    (School of Economics, University of Adelaide, Australia)

  • Kaori Kobayashi

    (School of Economics, University of Adelaide, Australia)


This paper examines the Aghion and Howitt [1992] “creative destruction” endogenous growth model in an open economy setting. We consider four alternative trade regimes. The first two regimes allow the monopoly producer of the intermediate good to attain worldwide monopoly rents. In the first of the two, the countries engage in trade of only the imperfectly produced intermediate good. In the second, the two countries trade in both the intermediate good as well as in ideas. The last two regimes consider two countries which are identical before and after trade opens such that pro-competitive gains from trade are achieved. We again consider when only intermediaries may be traded and thereafter when both intermediaries and ideas may be traded. We find that the effects of trade on growth and welfare depend critically on the assumptions one imposes.

Suggested Citation

  • Raul Barreto & Kaori Kobayashi, 2003. "Open Economy Schumpeterian Growth," Centre for International Economic Studies Working Papers 2003-17, University of Adelaide, Centre for International Economic Studies.
  • Handle: RePEc:adl:cieswp:2003-17

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    References listed on IDEAS

    1. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 531-555.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    More about this item


    Creative Destruction; Obsolescence; Endogenous Growth; International Trade; Imperfect Competition; Schumpeterian Growth;

    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
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General


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