Working Paper

Endogenous innovation in a north-north model of the product cycle

Abstract: This paper examines the effect of endogenous innovation in a North-North model of the product cycle. Innovation is a dynamic process that requires labor to b employed in research and development for innovation to occur. Technology is transferred both within and across countries. The results show that in this generalized product cycle model, the amount of innovation and technology transfer affects the economic incentives to innovate and the relative wages in both countries. As a result, changes in the amount of innovation in one country can have significant redistributional effects worldwide, both across and within countries.

Keywords: Technology; Econometrics;

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Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 1990

Number: 1990-007