Working Paper: NBER ID: w29611
Authors: Ufuk Akcigit; Marc Melitz
Abstract: This chapter was prepared for the Handbook of International Economics (Vol. 5) edited by Gita Gopinath, Elhanan Helpman, and Kenneth Rogoff. We provide a review of the recent literature -- both theoretical and empirical -- analyzing the multi-dimensional connections between globalization and innovation. We develop a model that features many of those mechanisms that connect trade and innovation. It features the joint selection of firms into innovation and international market participation (in our model, we restrict that participation to exports). Our model also highlights how exposure to international markets affects the incentives for innovation.
Keywords: International Trade; Innovation; Globalization
JEL Codes: F12; O31; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| international market exposure (G15) | innovation incentives (O31) |
| larger market size (F61) | increased innovation (O35) |
| competition (L13) | innovation (O35) |
| trade participation (F10) | quality of technology (L15) |
| competition (L13) | negative innovation (O35) |
| competition (L13) | positive innovation (O35) |