NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade and Uneven Growth

Robert C. Feenstra

NBER Working Paper No. 3276
Issued in March 1990
NBER Program(s):   ITI   IFM

We consider trade between two countries of unequal size, where the creation of new intermediate inputs occurs in both. We assume that the knowledge gained from R&D in one country does not spillover to the other. Under autarky, the larger country would have a higher rate of product creation. When trade occurs in the final goods, we find that the smaller country has its rate of product creation stowed, even in the long run. In contrast, the larger country enjoys a temporary increase in its rate of R&D. We also examine the welfare consequences of trade in the final goods, which depend on whether the intermediate inputs are traded or not.

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Document Object Identifier (DOI): 10.3386/w3276

Published: Journal of Development Economics, Vol. 49, no. 1 (April 1996): 229-256. citation courtesy of

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