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

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  • Gilles Koléda

Abstract

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).

Suggested Citation

  • Gilles Koléda, 2007. "A Two-countries Two-R&D-sectors Model of Growth and Trade," DEGIT Conference Papers c012_009, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c012_009
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    File URL: http://degit.sam.sdu.dk/papers/degit_12/C012_009.pdf
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    References listed on IDEAS

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    1. Dinopoulos, Elias & Segerstrom, Paul, 2003. "A Theory of North-South Trade and Globalization," CEPR Discussion Papers 4140, C.E.P.R. Discussion Papers.
    2. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
    3. Dinopoulos, Elias & Thompson, Peter, 1998. "Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-335, December.
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    More about this item

    Keywords

    Endogenous growth without scale effect; innovation; Trade; spillovers; R&D subsidies;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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