Idea Flows, Economic Growth, and Trade∗
نویسندگان
چکیده
We study a simple model of the world economy where the engine of growth is the flows of ideas. Ideas are assumed to diffuse randomly across pair of goods, where the processes used in the production of the lower cost good is adopted. We assume that producers in a country can learn from all sellers of goods to this country. We analyze how trade in goods, and impediments to it, affect this diffusion. We find that trade costs can have a large impact on the distribution of productivity. In addition, our theory provides a new micro-foundation for the Frechet distribution of productivity that is frequently used in quantitative trade models. ∗We thank Sam Kortum and Ben Moll for their comments.
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