Innovation,diffusion, and trade: Theory and measurement |
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| Affiliation: | 1. Federal Reserve Bank of Saint Louis, One Federal Reserve Bank Plaza, Saint Louis, MO 63166-0442, United States;2. INSEAD, France;1. Department of Economics, New York University, 19 W 4th Street, New York, NY 10012, United States;2. Research Department, Federal Reserve Bank of Richmond, United States;3. Research Department, Federal Reserve Bank of New York, United States;1. International School of Economics and Management, Capital University of Economics and Business, Beijing, China;2. University of California, Department of Economics, Santa Barbara, CA 93106, United States;1. Department of Economics, Concordia University, 1455 de Maisonneuve Blvd. West, Montréal, QC Canada H3G 1M8;2. CIREQ, Montréal, QC, Canada;3. Department of Economics, National University of Mongolia, Baga Toiruu 4, Ulaanbaatar, Mongolia;1. Division of Monetary Affairs Board of Governors of the Federal Reserve System, United States;2. The Clearing House, 1114 Avenue of the Americas, New York, NY 10036, United States;3. La Caixa Research Department, Spain;1. International Monetary Fund and Joint Vienna Institute, Austria;2. Rutgers University and NBER, United States |
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| Abstract: | ![]()
What are the sources of economic growth? This paper presents a multicountry growth model of innovation and the adoption of foreign technologies through trade. The costs of both domestic innovation and adopting foreign innovations are estimated using data on innovation, output and trade. A decomposition of the sources of growth shows that technology adoption accounts for about 65% of “embodied” growth in developing countries. Developed countries grow mainly through domestic innovation, which explains 75% of their “embodied” growth. Counterfactuals show how growth rates and levels of income would change if countries faced the same barriers to adoption and research productivity. |
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| Keywords: | Innovation Technology adoption Trade in varieties Economic growth |
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