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Innovation, Diffusion, and Trade: Theory and Measurement

  • Santacreu, Ana Maria

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 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 trade channel has been particularly important in developing countries, accounting for about three-fourths of their growth. Finally, I run counterfactuals analysis.

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File URL: http://mpra.ub.uni-muenchen.de/35311/1/MPRA_paper_35311.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35311.

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Date of creation: 07 Dec 2011
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Handle: RePEc:pra:mprapa:35311
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