The Solow Model in an Open Economy

The aim of this article is to extend the traditional Solow model to a small open economy. We focus on the role of the speed of technological progress at the moment of full opening to international capital market. We are primarily interested in two fundamental issue: firstly, what advantages may a small economy gain from its opening to the international capital flow, and secondly, what is the role of savings in the open economy growth. The considerations are based on the assumption that the interest rate is formed exogenously