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Phases of Imitation and Innovation in a North-South Endogenous Growth Model

  • Chui, Michael
  • Currie, David
  • Levine, Paul L
  • Pearlman, Joseph

In this paper, we develop a North-South endogenous growth model to examine three phases of development in the South: imitation of Northern products; imitation and innovation; and finally, innovation only. In particular, the model has the features of catching up (and potentially overtaking), which are of particular relevance to the Pacific Rim economies. We show that the possible equilibria depend on cross-country assimilation effects and the ease of imitation. We then apply the model to analyse the impact of R&D subsidies. There are some clear global policy implications which emerge from our analysis. First, because subsidies to Southern innovation benefit the North as well, it is beneficial to the North to pay for some of these subsidies. Second, because the ability of the South to assimilate Northern knowledge and innovate depends on Southern skills levels, the consequent spillover benefits on growth make the subsidizing of Southern education by the North particularly attractive.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1489.

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Date of creation: Oct 1996
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Handle: RePEc:cpr:ceprdp:1489
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  1. Devereux, Michael B & Lapham, Beverly J, 1994. "The Stability of Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 299-305, February.
  2. Paul Krugman, 1989. "Is Bilateralism Bad?," NBER Working Papers 2972, National Bureau of Economic Research, Inc.
  3. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, vol. 80(4), pages 796-815, September.
  4. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-91, December.
  5. Klaus Waelde, 1994. "Transitional dynamics, convergence and international capital flows in two-country models of innovation and growth," International Trade 9403002, EconWPA, revised 06 Apr 1994.
  6. Helpman, E., 1992. "Innovation, Imitation and intellectual Property Rights," Harvard Institute of Economic Research Working Papers 1597, Harvard - Institute of Economic Research.
  7. Dinopoulos, Elias & Oehmke, James F. & Segerstrom, Paul S., 1993. "High-technology-industry trade and investment : The role of factor endowments," Journal of International Economics, Elsevier, vol. 34(1-2), pages 49-71, February.
  8. Stokey, Nancy L, 1995. "R&D and Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 62(3), pages 469-89, July.
  9. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "International Trade with Endogenous Technological Change," NBER Working Papers 3594, National Bureau of Economic Research, Inc.
  10. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
  11. Segerstrom, Paul S, 1991. "Innovation, Imitation, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 807-27, August.
  12. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May.
  13. Chou, Chien-Fu & Shy, Oz, 1991. "A Model of Technology Gap, Product Cycle, and the Process of Catching Up between the North and the South," The Economic Record, The Economic Society of Australia, vol. 67(198), pages 217-26, September.
  14. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
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