This paper makes the case that purposive, profit-seeking investments in knowledge play a critical role in the long-run growth process. First, we review the implications of neoclassical growth theory and the more recent theories of 'endogenous growth'. Then we discuss the empirical evidence that...

We construct a dynamic, two-country model of trade and growth in which endogenous technological progress results from the profit-maximizing behavior of entrepreneurs. We study the role that the external trading environment and that trade and industrial policies play in the determination of...

We introduce firm and worker heterogeneity into a model of innovation-driven endogenous growth. Individuals who differ in ability sort into either a research sector or a manufacturing sector that produces differentiated goods. Each research project generates a new variety of the differentiated...

The paper focuses on the innovation-based approach to endogenous growth. It begins by spelling out conditions for sustained long-run growth in neoclassical economies and uses these conditions as a standard of comparison for the conditions required to sustain long-run growth in economies with...

In this paper, we examine one channel through which the trade regime might affect growth in the long run. We model endogenous technological progress that results from profit maximizing investments by far-sighted entrepreneurs. Productivity in the research lab depends upon the "stock of knowledge...

We construct a model of growth based on endogenous technological change in a small, open economy. Entrepreneurs develop new intermediate products whenever the present value of potential profits exceeds the cost of R&D. Diversity of intermediates contributes to total factor productivity in the...

In this paper we study how aggregate output responds to the arrival of a new General Purpose Technology (GPT) by looking at adjustment mechanisms that operate through labor markets. We show that under a wide set of circumstances the arrival of a new GPT that raises long-run output can trigger a...

History and theory alike suggest that General Purpose Technologies (GPT's), such as the steam engine or electricity, may play a key role in economic growth. In a previous paper (Helpman and Trajtenberg, 1994) we incorporated this notion into a Grossman-Helpman growth model, and explored the...