Growth, Research, and Free Trade with Knowledge as Global Public Capital
Growth, Research, and Free Trade with Knowledge as Global Public Capital

Summary/Abstract: The purpose of this study is to explain dynamics of global growth and trade patterns with wealth and utilizing knowledge as basic determinants. It builds a multi-country growth model with economic structure and research. Global economy composes of any number of countries and each country has one production sector and one university. Knowledge is through learning by doing and research. Knowledge is global public good and is applied by countries with different utilization efficiencies. The production sector is the same as in the one-sector growth Solow model (Solow, 1956), while capital mobility and trade patterns are determined like in the Oniki-Uzawa model (Oniki and Uzawa, 1956). We use a utility function proposed by Zhang (1993) to determines saving and consumption. The movement of the system is given by differential equations. We simulate the model. Our comparative analysis provides some insights into the complexity of international trade with endogenous wealth and knowledge.

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