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- Title
TECHNOLOGICAL LEADERSHIP AND SUSTAINABLE GROWTH IN A BILATERAL TRADE MODEL.
- Authors
Cabo, Francisco; Martín-Herrán, Guiomar; Martínez-García, María Pilar
- Abstract
This paper develops a trade model for a technologically leading country and a developing country that exploits a renewable natural resource. Technology diffuses from the technological leader to the developing country through foreign direct investment (FDI). Alternatively, innovative activities can also be carried out in the developing economy. We prove the existence and uniqueness of an equilibrium path along which both countries grow at the same rate, maintaining the natural-resource stock at a constant level. The saddle-point property for this equilibrium is proved and a sensitivity analysis is carried out. The steady-state growth rate and consumption under both scenarios are compared and the effect of resource abundance analyzed.
- Subjects
BUSINESS; RENEWABLE natural resources; TECHNOLOGICAL progress; FOREIGN investments; ENDOGENOUS growth (Economics)
- Publication
International Game Theory Review, 2008, Vol 10, Issue 1, p73
- ISSN
0219-1989
- Publication type
Article
- DOI
10.1142/S0219198908001789