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TECHNOLOGY, TRADE, AND GROWTH: THE ROLE OF EDUCATION

Published online by Cambridge University Press:  02 July 2015

Klaus Prettner  and
Holger Strulik
Klaus Prettner*
Affiliation:
Institute of Mathematical Methods in Economics, Vienna University of Technology
Holger Strulik
Affiliation:
University of Goettingen
*
Address correspondence to: Klaus Prettner, Institute of Mathematical Methods in Economics, Vienna University of Technology, Argentinierstraße 8/4/105-3, 1040 Vienna, Austria; e-mail: klaus.prettner@econ.tuwien.ac.at.
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Abstract

We generalize a trade model with firm-specific heterogeneity and R&D-based growth to allow for endogenous education and fertility. The framework is able to explain cross-country differences in living standards and trade intensities by the differential pace of human capital accumulation among industrialized countries. Consistent with the empirical evidence, scale matters for relative economic prosperity as long as countries are closed, whereas scale does not matter in a fully globalized world. The average human capital of a country, by contrast, influences its relative economic prosperity irrespective of trade-openness.

Keywords

Technological ProgressGlobalizationDemographic ChangeEducation
Type
Notes
Information
Macroeconomic Dynamics , Volume 20 , Issue 5 , July 2016 , pp. 1381 - 1394
Copyright
Copyright © Cambridge University Press 2015 

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