Article ID Journal Published Year Pages File Type
7343323 Cuadernos de Economía 2010 31 Pages PDF
Abstract
This paper explores the relationship between trade openness, competition and productivity growth, in a multi-sector R&D endogenous growth model where we allow for sectorial differences in competition levels. A movement from autarky to free trade extends the size of the market but it increases competition within each market. The joint effect rises the output produced per firm, R&D employment and productivity growth. When we allow for sectorial differences, the less competitive sectors obtain larger gains in efficiency, increasing by more R&D investment and productivity growth. Moreover, R&D employment in the most competitive sectors may reduce due to a crowding-out effect from the less competitive sectors: The latter, increases the demand for rival inputs, attracting labor from R&D and production activities of the other sectors.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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