We study the global innovation and diffusion of ideas by introducing trade into the model in Eaton and Kortum (1999 … intensity of innovation within countries over time and diffusion rates across countries. We find significant specialization … across the globe: some countries have high innovation rates, while other countries rely on diffusion. Although innovation is …

Innovation depends on exporting and, in particular, on scale and competition in export markets. We develop a theory … featuring (1) quality-segmented markets, (2) step-by-step innovation that moves firms forward along the quality ladder, and (3 …) escape-the-competition motives for innovation. We derive four predictions about the impact on innovation of scale and …

reforms also redistribute innovation across industries in closer alignment to its distribution in the U.S., which we take to … increasing value-added growth rates across all industries, and by larger margins in industries with more innovation potential …

two strategies toward that end: imitation and innovation. The theory bears predictions about the evolution of the …