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A symmetric Heckscher-Ohlin model of endogenous growth.
- Source :
- Journal of Economics; Nov2015, Vol. 116 Issue 3, p183-209, 27p
- Publication Year :
- 2015
-
Abstract
- We study the interaction between production and R&D patterns in a $$2\times 2\times 2$$ open-economies model of endogenous growth. Unlike existing studies, we treat the two industries entirely symmetrically-both are imperfectly competitive, and engage in sector-specific expanding-product-variety or quality-ladder innovation activities. To achieve a more satisfactory analytical characterization, we eliminate scale effects and impose strict concavity rather than linearity on the contribution of skilled labour to industry R&D. With imperfect international knowledge spillovers, an increase in one country's skilled-labour endowment above the other's affects production and R&D activities in both countries, with the resulting increased production and research specialization across countries raising world innovation rates in both industries. Surprisingly, increasing one country's skilled-labour endowment towards the other's can reduce world innovation rates in both industries, on account of the resulting reduced specialization. Broader implications of the analysis are also discussed. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 09318658
- Volume :
- 116
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Journal of Economics
- Publication Type :
- Academic Journal
- Accession number :
- 110318653
- Full Text :
- https://doi.org/10.1007/s00712-014-0430-4