We develop a trade model in which productivity presents an arbitrary pattern of correlation. The model approximates the full class of factor demand systems consistent with Ricardian theory. In particular, our framework formalizes Ricardo's insight that countries gain more from trade with...

We review a recent body of theoretical literature that links the creation and diffusion of knowledge and technology to openness. We analyze two channels through which the spread of new ideas occurs: international trade and the activity of multinational firms (multinational production). The...

We develop a Ricardian model of trade in which countries innovate ideas that diffuse across the globe. In this model, the forces of innovation and diffusion combine to shape trade substitution patterns. Innovation makes a country technologically distinct, reducing their substitutability with...

We review a recent body of theoretical literature that links the creation and diffusion of knowledge and technology to openness. We analyze two channels through which the spread of new ideas occurs: international trade and the activity of multinational firms (multinational production). The...

We develop a trade model in which productivity--the result of a country's ability to adopt global technologies--presents an arbitrary pattern of spatial correlation. The model generates the full class of import demand systems consistent with Ricardian theory, and, hence, captures its full...

We study the global innovation and diffusion of ideas by introducing trade into the model in Eaton and Kortum (1999) (EK). This extension allows us to use international trade flows and country-level factor costs to estimate both the intensity of innovation within countries over time and...