Trade Policy and Innovation

International competition in vertically differentiated markets with innovation and imitation: Trade policy versus Free trade∗

The important characteristic of international competition between firms from developed and less developed countries is vertical product differentiation, where firms’ quality choices are strategic decisions. We consider a model with sequential quality choice and the possibility of imitation, and compare positive and normative aspects of this setup in free trade and under strategic trade policy. ...

South African Trade Policy Matters : Trade Performance and Trade Policy

South African trade policy has exerted a major influence on the composition and aggregate growth of trade. In the Apartheid period, trade protection seriously impeded both exports and imports, and the economy depended on favorable global commodity price trends to avoid running into an external constraint. South Africa developed a comparative advantage in capital-intensive primary and manufactur...

Innovation surveys and innovation policy

Firm Innovation, Productivity, and Trade

Firm innovation effort, productivity, and export propensity are found to be positively correlated with one another. Two alternative explanations have been offered for this — innovation increases productivity and more productive firms self-select into exporting or, alternatively, exporting increases learning and innovation, which in turn affects productivity. We use differences in timing implied...

Innovation, Di usion, and Trade

We explore the determinants of research specialization and examine the e ects of technology di usion and trade on the incentives for innovation. To some extent, di usion substitutes for trade. If trade costs are low relative to di erences in comparative advantage in doing research, rapid di usion implies specialization in research activity. Country size has an ambiguous e ect on specialization ...