Learning by doing, trade in capital goods and growth

Goh, Ai‐Ting; Olivier, Jacques

doi:10.1016/s0022-1996(01)00124-6

Cited by 26 publications

(16 citation statements)

References 21 publications

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“…In theory, learning need not occur through the export channel only. Endogenous growth models, such as by Rivera‐Batiz and Romer (1991), Lee (1995), Pissarides (1997), Chuang (1998) and Goh and Olivier (2002), have also illustrated how trade in capital goods could also generate the same type of learning externalities that drive growth in those models that focus on the export‐side. These various models emphasise at least two main learning channels.…”

Section: Empirical Evidence On Trade Learning and Growthmentioning

confidence: 99%

Trade‐induced Learning and Industrial Catch‐up

Mendoza

2010

The Economic Journal

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This article develops a model of trade-induced learning whereby both domestic and cross-border learning externalities could drive long-run growth. This framework is used to synthesise the emerging empirical evidence, revealing how trade-induced learning could underpin the mechanics behind trade and growth in at least three important ways: first, trading matters, as firms might be able to increase their productivity due to export and import linkages with buyers and suppliers; second, whom you trade with matters, as richer and more technologically advanced trading partners offer more scope for trade-induced learning; and third, what products you trade matters.Developing the non-traditional tradable sector, notably manufacture is now at the core of many developing countries' industrialisation and growth strategies. The rationale behind this partly lies in the myriad problems associated with the alternatives. An expansion in non-tradables could be self-defeating, as movement in the terms of trade that this will cause also diminishes the gains to be had from it. Furthermore, an expansion in primary goods exports introduces increased vulnerability to trade-related shocks which plague economies that have remained undiversified and specialised mostly in traditional exports. On the other hand, specialising in manufacturing offers distinct advantages. World markets offer the benefits of scale and seemingly insatiable demand for highly differentiated manufactured products. Manufacturing also offers opportunities for a pattern of specialisation that is much more conducive for entrepreneurs in a country to latch on to new economic activities that could further enhance the country's productivity potential.Furthermore, contrary to the predictions of a number of early endogenous growth models, the emerging empirical evidence and recent trends suggest that even with increased trade, some initially less industrialised and technologically backward countries were still able to grow more robust manufacturing sectors and climb the technology and export sophistication ladder. The success stories include the so-called Asian 'tiger economies' and 'newly industrialised economies' or NIEs.

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Section: Empirical Evidence On Trade Learning and Growthmentioning

confidence: 99%

Trade‐induced Learning and Industrial Catch‐up

Mendoza

2010

The Economic Journal

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“…They demonstrate that such subsidies in the South enhance learning and generate gains from trade for both the North and the South. Goh and Olivier (2002) present a model of trade and growth driven by learning by doing. By allowing capital goods to be traded internationally, they show that the existence of learning by doing in open economies helps to generate a convergence of per-capita incomes.…”

Section: Related Literaturementioning

confidence: 99%

The export technology content, learning by doing and specialization in foreign trade

İyigün

2004

Journal of International Economics

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“…The likely channels for this positive impact include increased scale, increased variety, improved quality, reduced costs of imported intermediate inputs, transfer of technology and R&D spillovers. These sources of gains have been highlighted in the endogenous growth literature by Grossman and Helpman (1991), Ethier (1979Ethier ( , 1982, Rivera-Batiz and Romer (1991) regarding the role of foreign intermediate inputs in enhancing growth and have also been highlighted in several theoretical and empirical studies by Lee (1995), Eaton and Kortum (2001), Goh and Olivier (2002), Xu and Wang (1999) and Alfaro and Hammel (2007) which specify the influence of trade liberalization of intermediate and capital goods sectors on firm level performance.…”

Section: Discussion Of the Main Findingsmentioning

confidence: 86%

Impact of Trade Liberalization on Indian Textile Firms: A Panel Analysis

Mukherjee

Chanda

2016

International Trade and International Finance

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The textile industry is one of India's major industries in terms of output, investment, and employment. It accounted for 4 % of India's GDP, 14 % of total industrial production, and 11 % of total export earnings in 2012. The industry employs around 45 million people, second only to agriculture. A wide range of textile products are produced and exported from India. Exports of most textile products registered high growth during the 2005-2009 period. The industry and its various subsectors have also experienced a significant reduction in domestic tariff and nontariff barriers over the last decade in addition to liberalization in the global market following the phasing out of the MFA. This chapter examines the impact of India's trade liberalization on firm-level performance in terms of profitability, sales revenues, and imports of raw material for different subsectors of India's textile industry over the 2000-2009 period. It makes use of firm-level panel data from the CMIE−Prowess database to determine this impact. It also analyzes how this impact has been influenced by various firm-specific characteristics. The main finding from this analysis is that there has been an improvement in firm-level profitability and sales and an increase in imported raw materials due to domestic trade liberalization. The analysis also shows that the effect has been stronger through the input sourcing channel, mainly due to the removal of quantitative restrictions on inputs used by the textile industry and that larger firms have been able to gain more from trade liberalization. The analysis and methodology used for the textile industry can be used in similar firm-level studies for other important industries in India.

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Learning by doing, trade in capital goods and growth

Cited by 26 publications

References 21 publications

Trade‐induced Learning and Industrial Catch‐up

Trade‐induced Learning and Industrial Catch‐up

The export technology content, learning by doing and specialization in foreign trade

Impact of Trade Liberalization on Indian Textile Firms: A Panel Analysis

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