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Learning-by-Doing and Its Implications for Economic Growth and International Trade

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  • Mao, Zi-Ying

Abstract

This paper extends the learning-by-doing model of Alwyn Young (1991), which assumes bounded learning-by-doing in each industry and knowledge spillovers, from two perspectives. First, it introduces physical capital as another factor of production in addition to labor. Second, it takes into account capital accumulation and population growth. This extended model is then used to study the dynamic effects of learning-by-doing in both autarky and two-country free trade situations. The main findings are: 1. Learning-by-doing is the source of sustainable growth in the long-run; 2. In both autarky and free trade situations, an increase in population growth rate or saving rate expedites both the growth rate of Real GDP per capita and technical progress in the long-run; 3. Compared with the autarky situation, under free trade the LDC experiences slower growth rate of per-capita output and slower technical progress, while the situation in DC is just the opposite. In addition, the effects of free trade on intertemporal welfare as well as the implications of a change in population growth rate or saving rate are also discussed based on the conclusions in Young (1991).

Suggested Citation

  • Mao, Zi-Ying, 2012. "Learning-by-Doing and Its Implications for Economic Growth and International Trade," MPRA Paper 40112, University Library of Munich, Germany, revised 18 Jul 2012.
    • Handle: RePEc:pra:mprapa:40112
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    File URL: https://mpra.ub.uni-muenchen.de/42186/2/MPRA_paper_42186.pdf
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    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Findlay, Ronald & Kierzkowski, Henryk, 1983. "International Trade and Human Capital: A Simple General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 957-978, December.
    3. Ronald Findlay, 1995. "Factor Proportions, Trade, and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061759, December.
    4. Jaffe, Adam B, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits, and Market Value," American Economic Review, American Economic Association, vol. 76(5), pages 984-1001, December.
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    6. Findlay, Ronald, 1980. "The Terms of Trade and Equilibrium Growth in the World Economy," American Economic Review, American Economic Association, vol. 70(3), pages 291-299, June.
    7. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-472, June.
    8. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
    9. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
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    12. Teubal, Morris, 1973. "Comparative advantage and technological change: The learning by doing case," Journal of International Economics, Elsevier, vol. 3(2), pages 161-177, May.
    13. Daron Acemoglu, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 779-804.
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    Cited by:

    1. Chakraborty, Kamalika & Chakraborty, Bidisha, 2018. "Endogenous Altruism, Learning by Doing Effect and Impact of Domestic Policies on Child Labour," MPRA Paper 89229, University Library of Munich, Germany.
    2. Chakraborty, Kamalika & Chakraborty, Bidisha, 2016. "Learning by doing, low level equilibrium trap, and effect of domestic policies on child labour," MPRA Paper 74712, University Library of Munich, Germany.
    3. Chakraborty, Kamalika & Chakraborty, Bidisha, 2016. "Child labour ban versus Education subsidy in a model with learning by doing effect in unskilled work," MPRA Paper 74203, University Library of Munich, Germany.

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    More about this item

    Keywords

    Learning-by-Doing; Human Capital; Technical Progress; Intertemporal Welfare; Sustainable Growth; Free Trade;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other
    • F1 - International Economics - - Trade
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • F19 - International Economics - - Trade - - - Other

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