From Autarky to Integration: Imitation, Foreign Borrowing, and Growth
September 1, 1998
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Summary
The effects on growth of the integration of an autarkic country into the world economy are analyzed, focusing on the differing roles of imitation and innovation in human capital accumulation. The country initially concentrates on imitation of foreign knowledge; subsequently, as it approaches the knowledge frontier, innovation plays a greater role. Late developers catch up with the rest of the world more rapidly than early developers, reflecting the relatively large imitation opportunity available to them. Restrictions on foreign borrowing reduce the speed of adjustment to the steady state and lower growth and welfare for the country that imposes them.
Subject: Balance of payments, Capital controls, Consumption, Financial institutions, Human capital, Labor, National accounts, Stocks
Keywords: accumulation function, capital accumulation, Capital controls, capital mobility, Consumption, Foreign Borrowing, Global, Growth, Human capital, Imitation, Innovation, interest rate, Knowledge Gap, mobility case, Stocks, WP
Pages:
35
Volume:
1998
DOI:
Issue:
140
Series:
Working Paper No. 1998/140
Stock No:
WPIEA1401998
ISBN:
9781451928907
ISSN:
1018-5941
