Emerging economies may grow fast because there is a potential for catching-up. In this paper foreign knowledge spillovers raise productivity of R&D in the exposed sector. The higher the productivity gap the more profitable investment in R&D will be. As a result labor productivity in the...

Global knowledge spillovers allow backward countries to catch up by accumulating knowledge faster than leading countries. International growth differentials will fall as diminishing returns with respect to the national knowledge stock apply. The domestic growth rat e will finally equal the...