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Global Innovation and Knowledge Diffusion

Author

Listed:
  • Lind, Nelson
  • Ramondo, Natalia
Abstract
We develop a Ricardian model of trade in which countries innovate ideas that diffuse globally. The forces of innovation and diffusion combine to shape expenditure substitution patterns. Innovation makes a country technologically distinct, reducing their substitutability with other countries, while diffusion generates technological similarity and increases head-to-head competition. In the special case of an innovation-only model where countries do not share ideas, productivities are independent across space, and expenditure is CES. Consequently, departures from CES expenditure reveal diffusion patterns. Our theoretical results provide a mapping between the dynamics of observable expenditure and the dynamics of innovation and knowledge diffusion.

Suggested Citation

  • Lind, Nelson & Ramondo, Natalia, 2022. "Global Innovation and Knowledge Diffusion," CEPR Discussion Papers 17385, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17385
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    References listed on IDEAS

    as
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    Cited by:

    1. Kox, Henk L.M., 2022. "A micro-macro model of foreign direct investment: Knowledge-based gravity forces, self-selection and third-country effects," EconStor Preprints 266494, ZBW - Leibniz Information Centre for Economics.
    2. Koski, Heli & Fornaro, Paolo, 2024. "Digitalization and Resilience: Data Assets and Firm Productivity Growth During the COVID-19 Pandemic," ETLA Working Papers 113, The Research Institute of the Finnish Economy.
    3. Kox, Henk L.M., 2022. "Explaining foreign direct investment patterns: a testable micro-macro gravity model for FDI," MPRA Paper 115273, University Library of Munich, Germany.
    4. Lind, Nelson & Ramondo, Natalia, 2024. "Global knowledge and trade flows: Theory and measurement," Journal of International Economics, Elsevier, vol. 151(C).

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    More about this item

    Keywords

    Innovation; Diffusion; Poisson processes; Frechet distribution; Generalized extreme value; International trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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