Equilibrium Technology Diffusion, Trade, and Growth

2020/12/28 by Jesse Perla, Christopher Tonetti, Michael Waugh · 2 citations
Economics, Econometrics and Finance · #Economic Growth and Productivity #Firm Innovation and Growth #Global trade and economics

paper · doi:10.1257/aer.20151645

openalex publication_date 2020/12/28 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01

Abstract

We study how opening to trade affects economic growth in a model where heterogeneous firms can adopt new technologies already in use by other firms in their home country. We characterize the growth rate using a summary statistic of the profit distribution: the mean-min ratio. Opening to trade increases the profit spread through increased export opportunities and foreign competition, induces more rapid technology adoption, and generates faster growth. Quantitatively, these forces produce large welfare gains from trade by increasing an inefficiently low rate of technology adoption and economic growth. (JEL D21, D24, F14, F43, O33)

Citations

• Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity
• Managerial Incentives and Product Market Competition
• The Origins of Endogenous Growth
• What Determines Productivity?
• Improved Access to Foreign Markets Raises Plant-Level Productivity… for Some Plants*
• Imported Intermediate Inputs and Domestic Product Growth: Evidence from India
• The Quarterly Journal of Economics

Cited by

• Geopolitical fragmentation and trade
• Free trade [wikipedia]

Related

• Multinational production, technology diffusion, and economic growth
• Trade, Growth, and Product Innovation
• The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity
• The Impact of Geopolitical Conflicts on Trade, Growth, and Innovation
• Endogenous Technological Change