Working Paper: CEPR ID: DP1335
Authors: Dan Bendavid; Michael B. Loewy
Abstract: The theoretical framework presented here preserves many of the primary features of the standard neo-classical model, while introducing some modifications that transform it into an open economy endogenous growth model with knowledge accumulation. Knowledge accumulation is determined in part by the extent of knowledge spillovers from abroad and the extent to which each country is exposed to the knowledge stocks of other countries. The degree of this exposure is assumed to be directly related to the level of external trade - which implies that commercial policy can affect economic growth. In particular, unilateral trade liberalization may increase steady-state income growth in all countries.
Keywords: growth; knowledge; diffusion; trade
JEL Codes: E6; F1; F43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unilateral trade liberalization (F13) | steady-state growth rate of knowledge (O41) |
| unilateral trade liberalization (F13) | per capita income (D31) |
| steady-state growth rate of knowledge (O41) | economic growth (O49) |
| volume of trade (F10) | knowledge spillovers (O36) |
| knowledge spillovers (O36) | steady-state growth rate of knowledge (O41) |
| trade liberalization (F13) | knowledge accumulation (O36) |