MARKETS, EXTERNALITIES, AND THE DYNAMIC GAINS OF OPENNESS

• 成果类型: Article
• 署名作者: Monge-Naranjo, Alexander
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - St. Louis; Washington University (WUSTL)
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12381
• 发表日期: 2019
• 页码: 1131-1170
• 关键词: FOREIGN DIRECT-INVESTMENT; technology diffusion; Knowledge diffusion; domestic firms; GROWTH; TRADE; PRODUCTIVITY; ORGANIZATION; entrepreneurship; equilibrium

摘要

Inflows of foreign knowledge are key for developing countries to catch up with the world technology frontier. I construct a model to analyze the entry decisions of foreign firms and the incentives of domestic firms to invest in their own know-how, given the exposure to foreign ideas and competition. The model embeds two diffusion mechanisms typically considered separately in the literature: externalities and markets. I find that openness allows developing countries to fully catch up only when market transactions dominate the diffusion of ideas. Externalities are never enough to catch up and may lead to losses in income and welfare.