Working Paper: NBER ID: w2809
Authors: Gene M. Grossman; Elhanan Helpman
Abstract: We construct a dynamic, two-country model of trade and growth in which endogenous technological progress results from the profit-maximizing behavior of entrepreneurs. We study the role that the external trading environment and that trade and industrial policies play in the determination of long-run growth rates. We find that cross-country differences in efficiency at R&D versus manufacturing (i.e. comparative advantage) bear importantly on the growth effects of economic structure and commercial policies. Our analysis allows for both natural and acquired comparative advantage, and we discuss the primitive determinants of the latter.
Keywords: Comparative Advantage; Long-Run Growth; Trade Policies; Economic Performance
JEL Codes: F11; O41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| external trading environment (F10) | long-run economic performance (P17) |
| commercial policies (G52) | long-run economic performance (P17) |
| comparative advantage in R&D (O39) | growth outcomes (O40) |
| cross-country differences in efficiency in R&D (O57) | different growth rates (O41) |
| variations in trade policies (F13) | accumulation of resources (E22) |
| accumulation of resources (E22) | steady-state growth rate of per capita income (O41) |
| consumer preferences (D11) | accumulation of resources (E22) |