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...

How shifts in the economic leadership between countries can occur has been widely debated not only since the recent catch up of China in several sectors. However, there is no adequate theoretical model analyzing this question in the light of trade liberalization. This paper is the first one to...