International Trade, Technology Transfer, Growth, and Welfare in a Schumpeterian Model of Endogenous Growth

This paper provides a simple analysis of the role of international technology transfer in the determination of the long-run pattern of trade, growth, and welfare in a two-country world within an endogenous growth framework. It is shown how the possibility and form of technology transfer impinge upon the long-run pattern of trade and therefore long-run growth rates and welfare. The most interesting finding of this paper is that, under certain conditions, there is a case in which restricted trade is growth- and welfare-enhancing compared with free trade.