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Innovation, Diffusion, and Trade: Theory and Measurement

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  • Ana Maria Santacreu

    (INSEAD and Hong Kong Institute for Monetary Research)

Abstract

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.

Suggested Citation

  • Ana Maria Santacreu, 2012. "Innovation, Diffusion, and Trade: Theory and Measurement," Working Papers 192012, Hong Kong Institute for Monetary Research.
  • Handle: RePEc:hkm:wpaper:192012
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Nan Li & Ana Maria Santacreu & Jie Cai, 2016. "Knowledge Diffusion and Trade Across Countries and Sectors," 2016 Meeting Papers 650, Society for Economic Dynamics.
    2. Alberola, Enrique & Benigno, Gianluca, 2017. "Revisiting the commodity curse: A financial perspective," Journal of International Economics, Elsevier, pages 87-106.
    3. Haliassos, Michael & Jansson, Thomas & Karabulut, Yigitcan, 2014. "Incompatible European Partners? Cultural Predispositions and Household Financial Behavior," CEPR Discussion Papers 10039, C.E.P.R. Discussion Papers.
    4. Liao, Wei & Santacreu, Ana Maria, 2015. "The trade comovement puzzle and the margins of international trade," Journal of International Economics, Elsevier, vol. 96(2), pages 266-288.
    5. Grüning, Patrick, 2017. "Heterogeneity in the Internationalization of R&D: Implications for anomalies in finance and macroeconomics," SAFE Working Paper Series 185, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
    6. Grüning, Patrick, 2015. "International endogenous growth, macro anomalies, and asset prices," SAFE Working Paper Series 83, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
    7. Gavazzoni, Federico & Santacreu, Ana Maria, 2015. "International R&D Spillovers and Asset Prices," Working Papers 2015-41, Federal Reserve Bank of St. Louis.
    8. Edouard Challe & Julien Matheron & Xavier Ragot & Juan F. Rubio‐Ramirez, 2017. "Precautionary saving and aggregate demand," Quantitative Economics, Econometric Society, vol. 8(2), pages 435-478, July.
    9. Michael Donadelli, 2013. "Global integration and emerging stock market excess returns," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 6(2), pages 244-279, September.
    10. Wei Liao & Ana Maria Santacreu, 2012. "The Trade Comovement Puzzle and the Margins of International Trade," Working Papers 042012, Hong Kong Institute for Monetary Research.
    11. Ana Maria Santacreu & Federico Gavazzoni, 2014. "International Comovement through Endogenous Long Run Risk," 2014 Meeting Papers 993, Society for Economic Dynamics.
    12. Demir, Caner & Yurteri, Begüm & Türkcan, Burcu, 2013. "Yeniliklerin Dış Ticarete Etkileri Üzerine Mekansal Ekonometrik Bir Analiz: 2002-2009 Türkiye Örneği
      [A Spatial Econometric Analysis on the Effects of Innovations on Foreign Trade: 2002-2009 Turkey
      ," MPRA Paper 77615, University Library of Munich, Germany.
    13. Thien Nguyen & Lukas Schmid & Mariano Croce, 2014. "Global Entropy," 2014 Meeting Papers 1345, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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