Trade liberalisation and endogenous growth -: A q-theory approach

This paper introduces a new approach to the analysis of endogenous growth effects and uses it to illustrate two novel trade-and-growth links. The approach's simplicity allows us to introduce scale economies and imperfect competition into the R&D and financial intermediation sectors of a Romer-Grossman-Helpman endogenous growth model. We show that trade liberalisation can stimulate growth via a procompetitive effect in the R&D sector and/or financial sector. (C) 2000 Elsevier Science B.V. All. rights reserved. JEL classification: F43; F13; F12; F36; 04.