DP1255 Technological Diffusion, Convergence and Growth

Author(s): Robert J. Barro, Xavier Sala-i-Martin
Publication Date: October 1995
Keyword(s): Convergence, Growth, R&D Models, Technological Diffusion
JEL(s): O3, O34, O4, O41
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1255

We construct a model that combines elements of endogenous growth with the convergence implications of the neoclassical growth model. In the long run the world growth rate is driven by discoveries in those economies that lead in their use of technology. Followers converge towards leaders because copying is cheaper than innovation over some range. A tendency for copying costs to increase reduces followers' growth rates and thereby generates a pattern of conditional convergence. We discuss how countries are selected to be technological leaders, and we assess welfare implications. Poorly-defined intellectual property rights imply that leaders have insufficient incentive to invent and followers have excessive incentive to copy.