The relationship between openness and economic growth in developing countries has been fully analysed by a large number of empirical papers. Primary attention has been given to the advantages of an outward-oriented strategy and to the role of exports in economic performance. Nevertheless, the...

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...