The purpose of this project is to analyze the interactions between international trade and economic growth. Theoretical models of the growth process will be developed based on endogenous technological progress and the accumulation of human capital. The models will be designed to permit the study of how international trade linkages and the international dissemination of knowledge and information affect the incentives of individuals and firms to invest in new skills and technologies. This research is important because it will provide a better basis for understanding the role of international trade in promoting growth and development in the U.S. and other economies. This project consists of two parts. The first part is aimed at developing a theoretical framework for analyzing the process of ongoing product improvements. The framework will be used to study the positive and normative issues concerning R&D rivalry between firms in industrialized countries and linkages between innovating firms in the developed countries and imitating firms in the less developed ones. The second part is concerned with analyzing the process of the international transfer of information and technology. Various mechanisms for technology transfer will be investigated including the transfer of knowledge between trading partners, between subsidiaries of multinational corporations, and between the parties of international licensing agreements.
