2002/19 LEM Working Paper Series

An evolutionary model of international competition and growth
Carolina Castaldi
Growth, technological change, trade.

  JEL Classification:
O30, O41.

The paper attempts to interpret a few stylized facts of international economic growth by means of an open economy evolutionary model. The idea is that growth models that incorporate a richerrepresentation of the properties and effects of technological change can give a better explanation of the differentials in the growth performance anddevelopment patterns of countries worldwide.In the proposed multi-country model, growth is endogenously generated by the R&D activities performed by firms constantly searching for technological improvements. Both innovation and imitation processes are modeled and technological diffusion involves local spillovers. Firms are selected in allmarkets worldwide via an evolutionary replicator equation in terms of their 'competitiveness'. The predictions of the model arestudied under different regimes of technological change. The model generates persistent differentiation of levels of per capita income and growth rates across countries.

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