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Innovation, diffusion, and trade: theory and measurement

Author: Santacreu, Ana Maria INSEAD Area: Economics and Political Science Series: Working Paper ; 2010/46/EPS Publisher: Fontainebleau : INSEAD, 2010.Language: EnglishDescription: 52 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: Growth and imports are correlated across countries. However, the underlying mechanisms remain poorly understood. I develop a general equilibrium model in which imports and growth are connected by technological innovation and international diffusion through trade. Fitting the model to data on innovation, productivity, and trade in varieties, I find that most of the correlation is explained by these two mechanisms. Moreover, adoption has been particularly important in developing countries, accounting for about 80% of their growth in the last decade. Finally, I carry out a counterfactual analysis to examine the connections between trade and growth. Next title: Innovation, diffusion, and trade: theory and measurement (RV of 2010/46/EPS)
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Growth and imports are correlated across countries. However, the underlying mechanisms remain poorly understood. I develop a general equilibrium model in which imports and growth are connected by technological innovation and international diffusion through trade. Fitting the model to data on innovation, productivity, and trade in varieties, I find that most of the correlation is explained by these two mechanisms. Moreover, adoption has been particularly important in developing countries, accounting for about 80% of their growth in the last decade. Finally, I carry out a counterfactual analysis to examine the connections between trade and growth.

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