Navas, A. (2015) Trade liberalisation and innovation under sector heterogeneity. Regional Science and Urban Economics, 50. pp. 42-62. ISSN 0166-0462
Abstract
Mark-ups and the degree of trade openness vary substantially across sectors. This paper builds a multi-sector endogenous growth model to study the influence of trade liberalisation on innovation and, by extension, on sector and aggregate productivity growth under sectoral heterogeneity. I find that differences in the degree of competition generate substantial differences in firms' innovative responses to trade liberalisation. A movement from autarky to free trade promotes innovation and productivity growth in those sectors which are initially less competitive. This result is robust to an alternative scenario in which the economy is open to trade, but the degree of trade openness is common across sectors. Finally the paper outlines the importance of reallocation effects within sectors and across sectors that are the result of differences in product market competition across sectors. A movement towards zero trade costs has a smaller effect on aggregate innovation when the sectors are heterogeneous in terms of competition.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2015 Elsevier. This is an author produced version of a paper subsequently published in Regional Science and Urban Economics. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Sectoral productivity; International trade; Innovation |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 12 Jan 2015 11:06 |
Last Modified: | 22 Mar 2018 08:53 |
Published Version: | http://dx.doi.org/10.1016/j.regsciurbeco.2014.08.0... |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.regsciurbeco.2014.08.007 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:82770 |