Quality and Interrelated Growth

This paper develops a model in which a rapid expansion of the quality frontier by rich countries pushes poorer countries down the quality ladder and thereby leads to a widening dispersion of quality around the world as well as sluggish growth in poorer countries. This paper documents these features in the data, such as a recent rise in the dispersion of quality exported around the world between rich countries on the one hand and either poor countries or countries stuck in a middle-income trap on the other hand, as well as a widening dispersion of per-capita income among these groups.