Till O. Gross
2022 SSHRC Insight Development Grant
Innovation-driven Growth in a Multi-country World
The groundbreaking, Nobel-award work of Romer (1990) suggested that policy decisions could have a sizable impact on the long-run growth rate. However, the work by Jones (1995a,b) and later Bloom et al. (2020) cast considerable doubt on the applicability of Romer’s model. We develop a multi-country model of endogenous growth through innovation. The key feature of the model is that some ideas are globally applicable, while others are of local use only. Each country consists of a number of locations. There are innovation spillovers across locations and therefore across country borders. We argue that this model is both inherently plausible and consistent with an important set of growth facts. For instance, by computing a transition, we show that the model is capable of replicating a protracted decline in measured research productivity in the rich part of the world. (Joint with Paul Klein, Stockholm University.)