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Technological catching up, competitiveness and growth

Author

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  • Eleonora Cavallaro
  • Marcella Mulino

Abstract

We build an endogenous growth model for a technologically laggard country and analyse the implications for competitiveness when trade occurs in quality-differentiated products. We find that the conditions for an optimal growth with a balanced current account and no adverse terms-of-trade effects depend on the country's ability to compete in 'quality dominated markets' thanks to a successful technological catching up. We argue that the greater the ability to absorb foreign knowledge and improve upon foreign technologies, the greater the gains in competitiveness, and the benefits to long-run growth. A numerical simulation confirms our findings.

Suggested Citation

  • Eleonora Cavallaro & Marcella Mulino, 2009. "Technological catching up, competitiveness and growth," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(4), pages 505-525.
    • Handle: RePEc:taf:jitecd:v:18:y:2009:i:4:p:505-525
    DOI: 10.1080/09638190903217370
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    Cited by:

    1. Eleonora Cavallaro & Piero Esposito & Alessia Matano & Marcella Mulino, 2013. "Technological Catching Up, Quality of Exports, and Competitiveness: A Sectoral Perspective," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(6), pages 4-21, November.
    2. Bournakis, Ioannis & Tsoukis, Christopher, 2016. "Government size, institutions, and export performance among OECD economies," Economic Modelling, Elsevier, vol. 53(C), pages 37-47.

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