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Innovation and Trade Policy in a Globalized World

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  • Ufuk Akcigit

    ()

  • Sina T. Ates

    ()

  • Giammario Impullitti

    ()

Abstract

How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions, the paper builds a dynamic general equilibrium growth model where firm innovation endogenously determines the dynamics of technology, and, therefore, market leadership and trade flows, in a world with two large open economies at different stages of development. Firms’ R&D decisions are driven by (i) the defensive innovation motive, (ii) the expansionary innovation motive, and (iii) technology spillovers. The theoretical investigation illustrates that, statically, globalization (defined as reduced trade barriers) has ambiguous effects on welfare, while, dynamically, intensified globalization boosts domestic innovation through induced international competition.

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  • Ufuk Akcigit & Sina T. Ates & Giammario Impullitti, 2018. "Innovation and Trade Policy in a Globalized World," Working Papers id:12756, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:12756
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Innovation and Trade Policy in a Globalized World
      by Christian Zimmermann in NEP-DGE blog on 2019-01-11 22:50:59

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    Cited by:

    1. Pian Shu & Claudia Steinwender, 2019. "The Impact of Trade Liberalization on Firm Productivity and Innovation," Innovation Policy and the Economy, University of Chicago Press, vol. 19(1), pages 39-68.
    2. Giammario Impullitti & Omar Licandro & Pontus Rendahl, 2017. "Technology, Market Structure and the Gains from Trade," CESifo Working Paper Series 6727, CESifo.
    3. Ufuk Akcigit & Sina T. Ates & Josh Lerner & Richard R. Townsend & Yulia Zhestkova, 2020. "Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers," Working Papers 2020-136, Becker Friedman Institute for Research In Economics.
    4. Giovanni Dosi & Matteo Tranchero, 2018. "The Role of Comparative Advantage, Endowments and Technology in Structural Transformation," LEM Papers Series 2018/33, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Laurent Cavenaile & Pau Roldan-Blanco & Tom Schmitz, 2020. "International Trade and Innovation Dynamics with Endogenous Markups," Working Papers 671, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    6. Felipe Benguria & Felipe Saffie & Hidehiko Matsumoto, 2019. "Productivity and Trade Dynamics in Sudden Stops," 2019 Meeting Papers 1378, Society for Economic Dynamics.
    7. BENEDETTI FASIL Cristiana & IMPULLITTI Giammario & LICANDRO Omar & SEDLACEK Petr, 2020. "Firm and Technology Dynamics in the Short- and Long-Run: A Macroeconomic Model for Research and Innovation Policy Evaluation," JRC Working Papers JRC120871, Joint Research Centre (Seville site).
    8. Li, Xiaogang, 2020. "Innovation, market valuations, policy uncertainty and trade: Theory and evidence," ISU General Staff Papers 202001010800009179, Iowa State University, Department of Economics.
    9. Martin Hauptfleisch, 2019. "Financial Decision-Making Using Data," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 6-2019, November.
    10. Takumi Naito, 2020. "Can the optimal tariff be zero for a growing large country?," Working Papers e146, Tokyo Center for Economic Research.
    11. Mandelman, Federico S. & Waddle, Andrea, 2020. "Intellectual property, tariffs, and international trade dynamics," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 86-103.
    12. Philippe Aghion & Antonin Bergeaud & Matthieu Lequien & Marc J. Melitz, 2018. "The Heterogeneous Impact of Market Size on Innovation: Evidence from French Firm-Level Exports," NBER Working Papers 24600, National Bureau of Economic Research, Inc.
    13. Carlos Esteban Posada, 2020. "Cambio técnico y política económica: la teoría y el caso colombiano (1950-2019)," Documentos de Trabajo CIEF 018506, Universidad EAFIT.
    14. Zheng, Mingbo & Feng, Gen-Fu & Feng, Suling & Yuan, Xuemei, 2019. "The road to innovation vs. the role of globalization: A dynamic quantile investigation," Economic Modelling, Elsevier, vol. 83(C), pages 65-83.
    15. Jackson, Emerson Abraham, 2020. "Fostering Sustainable Innovation through Creative Destruction Theory," MPRA Paper 102174, University Library of Munich, Germany, revised 21 Mar 2020.

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    More about this item

    Keywords

    eSS; innovation; trade policy; globalized world; globalization; competition; economic welfare; growth; equilibrium growth model; technology; leadership; market; markt leadership; defensive innovation motive; domestic innovation; international competition.;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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