Globalization improves the prospects for developing countries (DCs) to catch up economically with industrialized countries. Depending on economic policies with respect to openness and factor accumulation, globalization may increase capital and technology flows to DCs, thereby generating a higher...

We consider two channels via which foreign inputs into industrial production may lead to productivity effects. The first one concerns dynamic externalities between firms which share technical and organizational knowledge which is vital for the productivity growth of a particular industry. We...