Discussion Paper Details

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Title: Phases of Imitation and Innovation in a North-South Endogenous Growth Model

Author(s): Michael Chui, David Currie, Paul L Levine and Joseph Pearlman

Publication Date: October 1996

Keyword(s): Growth, Imitation, Innovation and Subsidies

Programme Area(s): International Macroeconomics

Abstract: In this paper, we develop a North-South endogenous growth model to examine three phases of development in the South: imitation of Northern products; imitation and innovation; and finally, innovation only. In particular, the model has the features of catching up (and potentially overtaking), which are of particular relevance to the Pacific Rim economies. We show that the possible equilibria depend on cross-country assimilation effects and the ease of imitation. We then apply the model to analyse the impact of R&D subsidies. There are some clear global policy implications which emerge from our analysis. First, because subsidies to Southern innovation benefit the North as well, it is beneficial to the North to pay for some of these subsidies. Second, because the ability of the South to assimilate Northern knowledge and innovate depends on Southern skills levels, the consequent spillover benefits on growth make the subsidizing of Southern education by the North particularly attractive.

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Bibliographic Reference

Chui, M, Currie, D, Levine, P and Pearlman, J. 1996. 'Phases of Imitation and Innovation in a North-South Endogenous Growth Model'. London, Centre for Economic Policy Research.