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Time preference, productivity, and the growth effects of integration

  • Michael Frenkel

    (Georgetown University)

  • Thomas Trauth

    (University of Mainz Germany)

Registered author(s):

    Traditional trade theory emphasizes static gains form trade, whereas the growing literature on endogenous growth is able to explain dynamic gains from trade, i.e., how trade influences economic growth. Empirical studies suggest that dynamic gains are likely to be significantly more important than static gains. More recently, a debate has evolved around the question: do welfare improving effects of trade still prevail when countries are "unequal" in some sense? This paper extends the discussion by investigating how differences in time preference rates and R&D productivity under alternative assumptions concerning knowledge diffusion affect the effect growth. We show that even when a developing country completely looses competitiveness in R&D, it experiences positive welfare improving effects with opening trade.

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    Paper provided by EconWPA in its series International Trade with number 9607001.

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    Length: 25 pages
    Date of creation: 11 Jul 1996
    Date of revision:
    Handle: RePEc:wpa:wuwpit:9607001
    Note: Type of Document - WordPerfect ; prepared on IBM PC ; to print on HP ; pages: 25 ; figures: included .
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    1. Luis A. Rivera-Batiz & Paul M. Romer, 1991. "International Trade with Endogenous Technological Change," NBER Working Papers 3594, National Bureau of Economic Research, Inc.
    2. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
    3. repec:tpr:qjecon:v:109:y:1994:i:1:p:299-305 is not listed on IDEAS
    4. Gene M. Grossman & Elhanan Helpman, 1994. "Technology and Trade," NBER Working Papers 4926, National Bureau of Economic Research, Inc.
    5. repec:tpr:qjecon:v:106:y:1991:i:2:p:369-405 is not listed on IDEAS
    6. Rivera-Batiz, Luis A. & Xie, Danyang, 1993. "Integration among unequals," Regional Science and Urban Economics, Elsevier, vol. 23(3), pages 337-354, July.
    7. Gene M. Grossman & Elhanan Helpman, 1989. "Comparative Advantage and Long-Run Growth," NBER Working Papers 2809, National Bureau of Economic Research, Inc.
    8. Michael B. Devereux & Beverly J. Lapham, 1993. "The Stability of Economics Integration and Endogenous Growth," Working Papers 878, Queen's University, Department of Economics.
    9. Luis A. Rivera-Batiz & Paul M. Romer, 1990. "Economic Integration and Endogenous Growth," NBER Working Papers 3528, National Bureau of Economic Research, Inc.
    10. 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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