This paper explores the impact of trade on growth when firms are heterogeneous. We find that greater openness produces anti-and pro-growth effects. The Melitz-model selection effects raises the expected cost of introducing a new variety and this tends to slow the rate of new-variety introduction...

This paper studies the investment creation and investment diversion effects of the EU's Single Market programme (EU92). We find suggestive, but not conclusive, evidence indicating that EU92 may have led to investment diversion in the economies of the European Free Trade Association (EFTA) and...

Spillovers from national industrial policies can cause helpful or harmful competition among policy makers and helpful or harmful interactions among the targeted industries. As a result, it is not in general possible to say whether industrial policy coordination is good or bad. However, reaching...

FDI has received surprisingly little attention in theoretical and empirical work on openness and growth. This paper presents a theoretical growth model where MNCs directly affect the endogenous growth rate via technological spillovers. This is novel since other endogenous growth models with...

Many studies have found a positive correlation between trade and growth, but do not attempt to identify the economic mechanisms involved. This paper attempts to identify one of the mechanisms linking trade and growth. In particular, we present a novel theoretical model that establishes a link...

This paper takes a modest step towards formalizing the theoretical interconnections among four post-Industrial-Revolution phenomena – the industrialization and growth take-off of rich ‘northern’ nations, massive global income divergence, and rapid trade expansion. Specifically, we present...

Global supply chains (GSCs) are transforming the world. This paper explores why they emerged, why they are significant and future directions they are likely to take along with some implications for policy. After putting global supply chains into an historical perspective, the paper presents an...

This paper estimates a two equation system – an investment equation and a growth equation – that allows trade openness to affect growth directly via its impact on TFP growth, and indirectly via its impact on the investment rate. We find that domestic trade barriers depress investment and...

This paper studies the investment creation and diversion effects of the EU's Single Market programme (EU92). We first present empirical evidence which suggests that EU92 caused investment diversion in the European Free Trade Association (EFTA) nations and investment creation in the EU. The...

Many studies have found a positive correlation between trade and growth, but do not attempt to identify the economic mechanisms involved. This paper attempts to identify one of the mechanisms linking trade and growth. In particular, we present a novel theoretical model that establishes a link...