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A Two-countries Two-R&D-sectors Model of Growth and Trade

  • Gilles Koléda

This paper presents a two-countries dynamic model of Schumpeterian growth with two innovative R&D sectors in each country: a vertical R&D sector that improves the quality of existing differentiated products and a horizontal R&D sector that creates new differentiated products. The two countries exchange differentiated products and beneficiate from knowledge spillovers, possibly from the other country. We opt for an endogenous growth without scale effect specification à la Howitt (1999) and explore the consequence on home research and production of an increase of research capacities in foreign country (possibly impulsed by R&D subsidies).

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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c012_009.

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Length: 22 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:deg:conpap:c012_009
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  1. Paul Segerstrom & Elias Dinopoulos, 2004. "A Theory of North-South Trade and Globalization," 2004 Meeting Papers 30, Society for Economic Dynamics.
  2. Dinopoulos, Elias & Thompson, Peter, 1998. " Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-35, December.
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