Endogenous Growth and International Technology Diffusion

This paper studies international technology and idea flows and their effects on growth and the welfare gains from openness. We analyze a model where producers decide either to acquire productivity-increasing ideas through search or to produce domestically and potentially for export with their existing productivity. These choices (both domestically and abroad) jointly determine the distribution of productivity-increasing ideas availablewhich in turn affect search and exporting decisions. We characterize the balance growth path and transition dynamics for this economy, thereby allowing us to provide a theory as to how openness changes technology/idea adoption, growth, and the welfare gains from openness.