NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade, Knowledge Spillovers, and Growth

Gene M. Grossman, Elhanan Helpman

NBER Working Paper No. 3485 (Also Reprint No. r1566)
Issued in October 1990
NBER Program(s):   EFG

In this paper, we examine one channel through which the trade regime might affect growth in the long run. We model endogenous technological progress that results from profit maximizing investments by far-sighted entrepreneurs. Productivity in the research lab depends upon the "stock of knowledge capital", a variable reflecting the state of scientific, engineering and industrial know-how in the local economy. We argue that local knowledge capital is likely to vary positively with the extent of contact between domestic agents and their counterparts in the international research and business communities, and that the number of such contacts increases with the level of commercial exchange. We derive the implications of this for the relationship between trade and growth.

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Document Object Identifier (DOI): 10.3386/w3485

Published: European Economic Review, Vol. 35, pp. 517-526, (1991). citation courtesy of

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