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Trade, Knowledge Spillovers, and Growth

  • Gene M. Grossman
  • Elhanan Helpman

In this paper, we examine one channel through which the trade regime might affect growth in the long run. We model endogenous technological progress that results from profit maximizing investments by far-sighted entrepreneurs. Productivity in the research lab depends upon the "stock of knowledge capital", a variable reflecting the state of scientific, engineering and industrial know-how in the local economy. We argue that local knowledge capital is likely to vary positively with the extent of contact between domestic agents and their counterparts in the international research and business communities, and that the number of such contacts increases with the level of commercial exchange. We derive the implications of this for the relationship between trade and growth.

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File URL: http://www.nber.org/papers/w3485.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3485.

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Date of creation: Oct 1990
Date of revision:
Publication status: published as European Economic Review, Vol. 35, pp. 517-526, (1991).
Handle: RePEc:nbr:nberwo:3485
Note: EFG
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  1. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," Working papers 527, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Gene M. Grossman & Elhanan Helpman, 1989. "Comparative Advantage and Long-Run Growth," NBER Working Papers 2809, National Bureau of Economic Research, Inc.
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