Learning by Doing, the Technology Gap, and Growth

Abstract

In contrast with other trade and growth theories in previous literature, I present a growth theory of trade-induced learning: Other things being equal, two conditions are essential for trade-induced learning. First, both exports and imports are equally important sources and are mutually reinforced in intensify- ing the learning process. Moreover, the nature or characteristics of these traded goods also influence the effect of learning. Second, trade openness is a prerequisite but not a sufficient condition for rapid growth. With whom one \r\ntrades (one`s trading partner) is a key factor in determining trade-induced technology spillover and hence in affecting enduring growth. Therefore, this trade-induced learning theory provides abundant and testable implications for the empirical study of trade and growth.