IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/halshs-00354236.html

Trade Liberalization, Competition And Growth

Author

Listed:
  • Omar Licandro

    (ECO - Economics Department - EUI - European University Institute - Institut Universitaire Européen)

  • Antonio Navas-Ruiz

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, UC3M - Universidad Carlos III de Madrid = University of Carlos III of Madrid)

Abstract

The aim of this paper is to understand whether international trade may enhance innovation and growth through an increase in competition.We develop a two-country endogenous growth model, both countries producing the same set of goods, with firm specific R&D and a continuum of oligopolistic sectors under Cournot competition. Since countries produce the same set of goods, trade openness makes markets more competitive, reducing prices and raising the incentives to innovate. More general, a reduction on trade barriers enhances growth by reducing domestic firms'market power.

Suggested Citation

  • Omar Licandro & Antonio Navas-Ruiz, 2007. "Trade Liberalization, Competition And Growth," Working Papers halshs-00354236, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00354236
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00354236v1
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-00354236v1/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Steven Bond‐Smith, 2022. "Discretely innovating: The effect of limited market contestability on innovation and growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 301-327, July.
    2. Navas Antonio & Licandro Omar, 2011. "Trade Liberalization, Competition and Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-28, May.
    3. Giammario Impullitti & Omar Licandro, 2018. "Trade, Firm Selection and Innovation: The Competition Channel," Economic Journal, Royal Economic Society, vol. 128(608), pages 189-229, February.
    4. Antonio Navas Ruiz, 2012. "Asymmetric trade liberalization, sector heterogeneity and industry productivity growth," Working Papers. Serie AD 2012-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    5. Giammario Impullitti, 2010. "International Competition And U.S. R&D Subsidies: A Quantitative Welfare Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1127-1158, November.
    6. Cai, Meng & Cui, Riming & Li, Dan, 2023. "Trade with innovation benefits: A re-appraisal using micro data from China," Journal of Asian Economics, Elsevier, vol. 89(C).
    7. Armando Garcia Pires, 2012. "International trade and competitiveness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 727-763, August.
    8. Teteryatnikova, Mariya, 2018. "R&D in trade networks: The role of asymmetry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 307-350.
    9. Carlos Uribe-Terán & Diego F. Grijalva & Ivan Gachet, 2025. "The contractionary effects of protectionist trade policy," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 161(3), pages 821-868, August.
    10. Navas, Antonio, 2010. "La Apertura al Comercio Exterior y sus Efectos sobre la Productividad en Presencia de Diferencias Intersectoriales," Working Papers in Economic Theory 2010/04, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    11. Ana M. Fernandes & Caroline Paunov, 2013. "Does trade stimulate product quality upgrading?," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1232-1264, November.
    12. Svetlana B. Avdasheva & Dina V. Tsytsulina, 2014. "The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared," HSE Working papers WP BRP 34/FE/2014, National Research University Higher School of Economics.
    13. Navas, Antonio, 2012. "Asymmetric trade liberalization, sector heterogeneity and Innovation," Working Papers in Economic Theory 2012/05, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    14. Long, Ngo Van & Raff, Horst & Stähler, Frank, 2011. "Innovation and trade with heterogeneous firms," Journal of International Economics, Elsevier, vol. 84(2), pages 149-159, July.
    15. Teteryatnikova, Mariya, 2018. "R&D in trade networks: The role of asymmetry," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 307-350.
    16. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    17. Boikos, Spyridon & Bucci, Alberto & Stengos, Thanasis, 2022. "Leisure and innovation in horizontal R&D-based growth," Economic Modelling, Elsevier, vol. 107(C).
    18. Gerda Dewit & Dermot Leahy, 2016. "Strategic R&D Commitment and the Gains from Trade," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 1129-1148, November.
    19. Navas, Antonio, 2015. "Trade liberalisation and innovation under sector heterogeneity," Regional Science and Urban Economics, Elsevier, vol. 50(C), pages 42-62.
    20. Teteryatnikova, Mariya, 2008. "R&D in the network of international trade: Multilateral versus regional trade agreements," WTO Staff Working Papers ERSD-2009-03, World Trade Organization (WTO), Economic Research and Statistics Division.
    21. Chih-Hai Yang, 2018. "Exports and innovation: the role of heterogeneity in exports," Empirical Economics, Springer, vol. 55(3), pages 1065-1087, November.
    22. Stracca, Livio, 2013. "The rise of China and India: blessing or curse for the advanced countries?," Working Paper Series 1620, European Central Bank.
    23. Aldaba, Rafaelita M., 2014. "The Philippine Manufacturing Industry Roadmap: Agenda for New Industrial Policy, High Productivity Jobs, and Inclusive Growth," Discussion Papers DP 2014-32, Philippine Institute for Development Studies.
    24. Giuseppe Caivano & Nicola D. Coniglio, 2016. "Long-Run Drivers of Current Account Imbalances in the EU: the Role of Trade Openness," SERIES 03-2016, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised May 2016.
    25. Vidanes, Mary Joyce N., 2017. "Impact of Trade Liberalization on Research and Development (R&D) Expenditures in the Philippines," Journal of Economics, Management & Agricultural Development, Journal of Economics, Management & Agricultural Development (JEMAD), vol. 3(01), June.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00354236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.