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On Smart SanctionsAbstract: In this paper, we develop a North-South endogenous growth model to examine three phases of development in the South: imitation of Northern products, imitation and innovation and finally, innovation only. In particular, the model has the features of catching up (and potentially overtaking) which are of particular relevance to the Pacific Rim economies. We show that the possible equilibria depend on cross-country assimilation effects and the ease of imitation. We then apply the model to analyse the impact of R&D subsidies. There are some clear global policy implications which emerge from our analysis. Firstly, because subsidies to Southern innovation benefit the North as well, it is beneficial to the North to pay for some of these subsidies. Secondly, because the ability of the South to assimilate Northern knowledge and innovate depends on Southern skills levels, the consequent spillover benefits on growth make the subsidising of Southern education by the North particularly attractive

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  • Hamid Beladi
  • Peter Reza Oladi

    (Utah State University)

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  • Hamid Beladi & Peter Reza Oladi, 2014. "On Smart SanctionsAbstract: In this paper, we develop a North-South endogenous growth model to examine three phases of development in the South: imitation of Northern products, imitation and innovatio," Working Papers 0144eco, College of Business, University of Texas at San Antonio.
    • Handle: RePEc:tsa:wpaper:0144eco
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    References listed on IDEAS

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    1. Kaemfer, William H & Lowenberg, Anton D, 1988. "The Theory of International Economic Sanctions: A Public Choice Approach," American Economic Review, American Economic Association, vol. 78(4), pages 786-793, September.
    2. Gary Clyde Hufbauer & Kimberly Ann Elliott, 1999. "Same Song, Same Refrain? Economic Sanctions in the 1990's," American Economic Review, American Economic Association, vol. 89(2), pages 403-408, May.
    3. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
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    More about this item

    Keywords

    Economic sanctions; oligarchic economies;

    JEL classification:

    • F1 - International Economics - - Trade
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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