South African Journal of Economic and Management Sciences, Vol 13, No 1 (2010)

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Openness, technological spillovers in the r&d sector and economic growth

Pei-Pei Chen, Rangan Gupta

Abstract


Recent studies have pointed out that trade liberalisation leads to technological spillovers, which tend to improve the efficiency of the domestic research and development (R&D) sector, and ultimately boost economic growth. In this paper, we theoretically formalise the above mentioned relationship between trade openness and growth, via knowledge spillover in the R&D sector. We show that, under certain conditions, an increase in the degree of openness not only enhances growth, but also improves the standard of living. The study, thus, prescribes policies of developing and improving the domestic R&D sector in order to reap the benefits of trade liberalisation.


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EISSN 2222-3436 (Online)