FDI has received surprisingly little attention in theoretical and empirical work on openness and growth. This paper presents a theoretical growth model where MNCs directly affect the endogenous growth rate via technological spillovers. This is novel since other endogenous growth models with...

This survey discusses the effect of macroeconomic fluctuations on long-run growth from both a theoretical and empirical perspective. It emphasizes the ‘opportunity cost’ approach, which states that firms will intertemporally substitute productivity-enhancing activities for regular production...

Harberger’s superneutrality conjecture contends that, although in theory the mix of direct and indirect taxes affects investment and growth, in practice tax policy is ineffective as an instrument to promote growth. This paper provides evidence to support this view by examining the predictions...

Natural resources account for 20% of world trade, and dominate the exports of many countries. Policy is used to manipulate both international and domestic prices of resources, yet this policy is largely outside the disciplines of the WTO. The instruments used include export taxes, price...

The political economy of resource rich countries is surveyed. The empirical evidence suggests that countries with a large share of primary exports in GNP have bad growth records and high inequality, especially if the quality of institutions and the rule of law are bad. The economic argument that...

Where imports are financed predominantly by rents from resource extraction or aid, the revenue generated by tariffs is illusory. Revenue earned by the tariff is offset by a reduction in the real value of aid and resource rents. Revenue is however moved between accounts in the government budget,...

While environmental and labour issues are not new to the GATT, nor to other trade policy fora, they are likely to have a more prominent role in trade policy discussions in the years ahead for the newly formed World Trade Organization (WTO). Many developing countries perceive the entwining of...

We construct a model that combines elements of endogenous growth with the convergence implications of the neoclassical growth model. In the long run the world growth rate is driven by discoveries in those economies that lead in their use of technology. Followers converge towards leaders because...

Returns to scale to capital and the strength of capital externalities play a key role for the empirical predictions and policy implications of different growth theories. We show that both can be identified with individual wage data and implement our approach at the city-level using US Census...

Investment in research and development (R&D) affects a country's total factor productivity. Recently new theories of economic growth have emphasized this link and have also identified a number of channels through which a country's R&D affects total factor productivity of its trade partners....