Equilibrium Technology Diffusion, Trade, and Growth

  title={Equilibrium Technology Diffusion, Trade, and Growth},
  author={Jesse Perla and Christopher Tonetti and Michael E. Waugh},
  journal={The American Economic Review},
We study how opening to trade affects economic growth in a model where heterogeneous firms can adopt new technologies already in use by other firms in their home country. We characterize the growth rate using a summary statistic of the profit distribution: the mean-min ratio. Opening to trade increases the profit spread through increased export opportunities and foreign competition, induces more rapid technology adoption, and generates faster growth. Quantitatively, these forces produce large… 
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