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In discussion paper No 1255, Robert J Barro and Research Fellow Xavier Sala-i-Martin construct a model that combines the appealing theoretical features of the models of endogenous growth with the interesting empirical features of the neo-classical model. The paper links the long-term growth implications of recent theories with the convergence implications of the neo-classical growth model. In the long run growth depends on the discovery of new products or technologies in a few leading economies. The rates of invention and growth reflect the forces described by Romer (1990). 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. They discuss how countries are selected to be technological leaders, and they assess welfare implications. Poorly-defined intellectual property rights imply that leaders have insufficient incentives to invent and followers have excessive incentives to copy. Technological Diffusion, Convergence and Growth |