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Phases of Imitation and Innovation in a North-South Endogenous Growth Model

Author

Listed:
  • Daniel Rais

    () (Department of Economics, University of Texas at Arlington)

  • Jonathan Goldman

    (Department of Finance, Grandiose University)

Abstract

In this paper, we develop a North-South endogenous growth model to examine three phases of development in the South: imitation of Northern products, imitation and innovation and finally, innovation only. In particular, the model has the features of catching up (and potentially overtaking) which are of particular relevance to the Pacific Rim economies. We show that the possible equilibria depend on cross-country assimilation effects and the ease of imitation. We then apply the model to analyse the impact of R&D subsidies. There are some clear global policy implications which emerge from our analysis. Firstly, because subsidies to Southern innovation benefit the North as well, it is beneficial to the North to pay for some of these subsidies. Secondly, because the ability of the South to assimilate Northern knowledge and innovate depends on Southern skills levels, the consequent spillover benefits on growth make the subsidising of Southern education by the North particularly attractive.

Suggested Citation

  • Daniel Rais & Jonathan Goldman, 2005. "Phases of Imitation and Innovation in a North-South Endogenous Growth Model," Working Papers template, University of Texas at Arlington, Department of Economics.
  • Handle: RePEc:txa:wpaper:template
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    File URL: http://www.uta.edu/faculty/drais/growthmodel.pdf
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    Keywords

    North-South; growth model; innovation assimilation;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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