Abstract
Invention is a fundamental driver of growth in living standards around the world. Trade and technology diffusion are two ways the benefit of an invention spreads to other countries. Impediments to diffusion give rise to differences in living standards and to comparative advantage in production, providing an incentive to trade. We review some basic facts. We then provide a simple model of the connections among these processes, showing how it can explain these facts.
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Eaton, J., Kortum, S. (2018). Trade, Technology Diffusion and Growth. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2577
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2577
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