Equilibrium Technology Diffusion, Trade, and Growth

By Jesse Perla, Christopher Tonetti, Michael E. Waugh. The American Economic Review, 2021

161 citations recorded by the source corpus.

We study how opening to trade affects economic growth in a model where heterogeneous firms can adopt new technologies already in use by other firms in their home country. We characterize the growth rate using a summary statistic of the profit distribution: the mean-min ratio. Opening to trade increases the profit spread through increased export opportunities and foreign competition, induces more rapid technology adoption, and generates faster growth. Quantitatively, these forces produce large welfare gains from trade by increasing an inefficiently low rate of technology adoption and economic growth. (JEL D21, D24, F14, F43, O33)

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/98b07afc4787acf3168ed3c1a1969164e03d31ea

Citations in the corpus

• Foreign Competition and Domestic Innovation: Evidence from US Patents (2020, unknown): “Xu and Gong (2017) and Hombert and Matray (2018) also use Compustat data to show that import competition has a negative impact on firms’ R&D expenditure and financial outcomes. Xu and Gong (2017) further show that R&D is reallocated toward more productive firms, and Hombert and Matray (2018) find ”
• The Impact of Trade Liberalization on Firm Productivity and Innovation (2018, unknown): “Another literature we exclude is the macro trade literature (e.g., Costantini and Melitz 2008; Atkeson and Burstein 2010; Perla, Tonetti, and Waugh 2015; Sampson 2016; Buera and Oberfield 2016).”