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On the Growth Effects of Import Competition

  • Richard E. Baldwin

This paper shows that the market structure of an economy's research sector is an important determinant of the aggregate growth rate, even though it has hereto been ignored in the new growth literature. To make this point in a concrete context, a simple model is used to show that import competition may stimulate growth by reducing the market power of domestic innovators. Specifically, import competition forces domestic innovators to chose between either quickening their pace of innovation or being displaced by foreign innovators. The pro-growth effect of import competition is shown to be welfare-increasing. The paper studies a number of policy implications including the growth effects of anti-trust policy, partial liberalization and trade in intellectual property rights.

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File URL: http://www.nber.org/papers/w4045.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4045.

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Date of creation: Apr 1992
Date of revision:
Handle: RePEc:nbr:nberwo:4045
Note: EFG ITI
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  1. Grossman, Gene M & Helpman, Elhanan, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 43-61, January.
  2. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-74, February.
  3. Shleifer, Andrei, 1986. "Implementation Cycles," Scholarly Articles 3451303, Harvard University Department of Economics.
  4. Stiglitz, Joseph E, 1970. "Factor Price Equalization in a Dynamic Economy," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 456-88, May-June.
  5. Deardorff, Alan V, 1973. "The Gains from Trade in and out of Steady-state Growth," Oxford Economic Papers, Oxford University Press, vol. 25(2), pages 173-91, July.
  6. Robert C. Feenstra, 1990. "Trade and Uneven Growth," NBER Working Papers 3276, National Bureau of Economic Research, Inc.
  7. Smith, M A M, 1977. "Capital Accumulation in the Open Two-Sector Economy," Economic Journal, Royal Economic Society, vol. 87(346), pages 273-82, June.
  8. Findlay, Ronald, 1974. "Relative Prices, Growth and Trade in a Simple Ricardian System," Economica, London School of Economics and Political Science, vol. 41(161), pages 1-13, February.
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