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Scale Externalities of the G7 Countries

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Author Info
Juergen Antony () (University of Augsburg, Department of Economics)
Abstract

Scale effects in per capita production are an outcome of many theoretical economic models like second generation growth models, models of the new trade theory or the new economic geography. The prediction is that larger economies should have a higher per capita production than smaller economies. However, in an open economy context the scale of the economy is less important because countries can participate in the scale of other countries through trade. This paper develops an open economy growth model of the second generation type which shows the relevance of the scale of the trading partners in technology goods for per capita production. This model is empirically tested using a cross section of 88 countries for the year 2000. The scale of these economies is measured by a weighted sum of scales of the G7 countries, since these are the countries spending most on R&D and are thus the main origin of technology. The results show that there is a significant effect of this scale variable on per capita production.

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Paper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number 280.

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Date of creation: Oct 2005
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Handle: RePEc:aug:augsbe:0280

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Related research
Keywords: growth and scale effects; international trade;

Find related papers by JEL classification:
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies

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References listed on IDEAS
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    Other versions:
  3. Bin Xu & Jianmao Wang, 1999. "Capital Goods Trade and R&D Spillovers in the OECD," Canadian Journal of Economics, Canadian Economics Association, vol. 32(5), pages 1258-1274, November. [Downloadable!] (restricted)
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  6. Frank Lichtenberg & Bruno van Pottelsberghe de la Potterie, 1996. "International R&D Spillovers: A Re-Examination," NBER Working Papers 5668, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Keller, Wolfgang, 2001. "Knowledge Spillovers at the World's Technology Frontier," CEPR Discussion Papers 2815, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  14. repec:rus:hseeco:71039 is not listed on IDEAS
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  16. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May. [Downloadable!] (restricted)
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    Other versions:
  18. Keller, Wolfgang, 2002. " Trade and the Transmission of Technology," Journal of Economic Growth, Springer, vol. 7(1), pages 5-24, March. [Downloadable!] (restricted)
    Other versions:
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