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Global Innovation and Knowledge Diffusion

Author

Listed:
  • Nelson Lind

    (Emory University)

  • Natalia Ramondo

    (UCSD)

Abstract

This paper develops a model of economic growth and trade in which countries innovate ideas that diffuse across the globe. This model dynamically generates max-stable multivariate Frechet productivity distributions and implies a mixed-CES import demand system. This demand system allows for rich substitution patterns in trade flows that arise from spatial correlation in technology. In the special case of a pure innovation model where countries do not share ideas, productivities are independent across space, and the demand system is CES. As a consequence, departures from CES reflect how knowledge diffusion generates technological similarity. In the general case with diffusion, high innovation countries tend to have dissimilar technology and their goods are less substitutable. These theoretical results provide a direct connection between estimable substitution patterns and the underlying dynamics of innovation and knowledge diffusion.

Suggested Citation

  • Nelson Lind & Natalia Ramondo, 2019. "Global Innovation and Knowledge Diffusion," 2019 Meeting Papers 1364, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:1364
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    References listed on IDEAS

    as
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