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Innovation, Diffusion, and Trade: Theory and Measurement

  • Ana Maria Santacreu

    (INSEAD and Hong Kong Institute for Monetary Research)

Growth and imports are correlated across countries, but the mechanisms underlying this relationship are not well understood. I develop a multi-country model in which imports and growth are endogenous variables connected by technological innovations and their international diffusion through trade. Fitting the model to data on innovation, productivity, and trade in varieties, I find that most of the growth-imports correlation is explained by these two mechanisms. I also find that the adoption channel has been particularly important in developing countries, accounting for about three-fourths of their growth. Finally, I run counterfactuals analysis, in which exogenous shocks such as a decrease in trade barriers or a decrease in adoption barriers induce a positive correlation between growth and import expansion.

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Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 192012.

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Length: 49 pages
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:hkm:wpaper:192012
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  1. Miklos Koren & Silvana Tenreyro, 2007. "Technological Diversification," CEP Discussion Papers dp0824, Centre for Economic Performance, LSE.
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  4. Cameron, Gavin & Proudman, James & Redding, Stephen, 2005. "Technological convergence, R&D, trade and productivity growth," European Economic Review, Elsevier, vol. 49(3), pages 775-807, April.
  5. Diego A. Comin & Mark Gertler & Ana Maria Santacreu, 2009. "Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations," NBER Working Papers 15029, National Bureau of Economic Research, Inc.
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  8. Bøler, Esther Ann & Moxnes, Andreas & Ulltveit-Moe, Karen-Helene, 2012. "Technological Change, Trade in Intermediates and the Joint Impact on Productivity," CEPR Discussion Papers 8884, C.E.P.R. Discussion Papers.
  9. Klette, Tor Jakob & Kortum, Samuel S, 2002. "Innovating Firms and Aggregate Innovation," CEPR Discussion Papers 3248, C.E.P.R. Discussion Papers.
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  12. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
  13. Diego Comin & Bart Hobijn, 2003. "Cross-country technology adoption: making the theories face the facts," Staff Reports 169, Federal Reserve Bank of New York.
  14. Zilibotti, Fabrizio & Aghion, Philippe & Acemoglu, Daron, 2006. "Distance to Frontier, Selection, and Economic Growth," Scholarly Articles 4554122, Harvard University Department of Economics.
  15. Matteo Ciccarelli & Fabio Canova, 2006. "Estimating Multi-country VAR models," Computing in Economics and Finance 2006 478, Society for Computational Economics.
  16. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  17. Hiroyuki Kasahara & Joel Rodrigue, 2005. "Does the Use of Imported Intermediates Increase Productivity? Plant-Level Evidence," University of Western Ontario, Economic Policy Research Institute Working Papers 20057, University of Western Ontario, Economic Policy Research Institute.
  18. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  19. Klenow, Peter J. & Rodriguez-Clare, Andres, 1997. "Economic growth: A review essay," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 597-617, December.
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  26. repec:fth:harver:1473 is not listed on IDEAS
  27. László Halpern & Miklós Koren & Adam Szeidl, 2011. "Imported Inputs and Productivity," CeFiG Working Papers 8, Center for Firms in the Global Economy, revised 16 Sep 2011.
  28. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March.
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