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Asymmetries with R&D-Driven Growth and Heterogeneous Firms

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  • Frédéric Olland

Abstract

This paper studies the impact of trade liberalization on the productivity growth of two asymmetric countries in a R&D driven growth model with heterogeneous firms. The Melitz’s reallocation of production induces positive but asymmetric productivity gains. Growth is also affected in an asymmetric way because trade liberalization reduces innovation incentives with a different strength in the two countries. A more productive country suffers a higher slowdown in the productivity growth rate.

Suggested Citation

  • Frédéric Olland, 2012. "Asymmetries with R&D-Driven Growth and Heterogeneous Firms," Working Papers of BETA 2012-16, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2012-16
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    File URL: http://beta.u-strasbg.fr/WP/2012/2012-16.pdf
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    References listed on IDEAS

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    1. Baldwin, Richard E. & Robert-Nicoud, Frederic, 2008. "Trade and growth with heterogeneous firms," Journal of International Economics, Elsevier, vol. 74(1), pages 21-34, January.
    2. Rod Falvey & David Greenaway & Zhihong Yu, 2011. "Catching Up or Pulling Away: Intra-Industry Trade, Productivity Gaps and Heterogeneous Firms," Open Economies Review, Springer, vol. 22(1), pages 17-38, February.
    3. Peter Gustafsson & Paul Segerstrom, 2010. "Trade Liberalization and Productivity Growth," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 207-228, May.
    4. Bulent Unel, 2010. "Technology Diffusion through Trade with Heterogeneous Firms," Review of International Economics, Wiley Blackwell, vol. 18(3), pages 465-481, August.
    5. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    6. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
    7. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
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    Cited by:

    1. Cardi, Olivier & Restout, Romain, 2015. "Fiscal Shocks In A Two-Sector Open Economy With Endogenous Markups," Macroeconomic Dynamics, Cambridge University Press, vol. 19(8), pages 1839-1865, December.

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    More about this item

    Keywords

    heterogeneous firms; trade and endogenous growth; productivity gap.;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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