There is a common perception that low productivity or low growth is due to what can be called an "innovation shortfall," usually identified as a low rate of investment in research and development (R&D) when compared with some high innovation countries. The usual reaction to this perceived...

"Building on Eaton and Kortum's (2002) model of Ricardian trade, Alvarez and Lucas (2005) calculate that a small country representing 1% of the world's GDP experiences a gain of 41% as it goes from autarky to frictionless trade with the rest of the world. But the gains from openness, which...