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National Productive Structure and Innovative Dynamics: Finding the (Endogenous) Path to Convergence

Listed author(s):
  • Jorge Cerdeira

    (Faculdade de Economia - Universidade do Porto)

  • Luís Pina Rebelo


    (Faculdade de Economia e Gestão - Universidade Católica Portuguesa - Porto, and Faculdade de Economia - Universidade do Porto)

We extend the model presented in Barro and Sala-i-Martin (1997) by allowing for two types of economies - more developed and in transition to European Union integration - to both imitate and innovate varieties of intermediate goods. Besides depending on research and development expenditures, we also allow for the stochastic nature of innovation by making it also dependent on a random component. We do this by Monte Carlo simulation, using a Box-Muller process, and solve a three differential equation model by using numerical methods. Two situations are presented: a leading economy with greater institutions and more labour than the transition economy versus a situation where an institutional advance is given to the transition economy.

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Paper provided by Católica Porto Business School, Universidade Católica Portuguesa in its series Working Papers de Economia (Economics Working Papers) with number 012008.

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Length: 28 pages
Date of creation: Feb 2008
Handle: RePEc:cap:wpaper:012008
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