Endogenous growth, international trade and dynamics

This PhD. dissertation consists of three essays to fill some gaps in the recent research in international trade and endogenous growth theory. The first essay explores the dynamic effect of interaction of research and development (R&D) activities among countries on endogenous economic growth. It attempts to fill the gap between the current endogenous growth research focused on independent R&D activities and decision-making in the international competition and the interdependent R&D competition in reality. This paper finds that the growth rates, welfare, and investment on R&D in the world do differ between independent R&D activity and interdependent R&D activities among countries. The welfare for each country in the open-loop Nash equilibrium is higher than that of the Markov-perfect Nash equilibrium, and both are lower than that in the cooperative game. The model shows that the ability to commit turns out to make every country better off. The interesting results are that when an increase in the number of countries does increase the growth rate in the open-loop Nash equilibrium, it is very possible to have the negative effect on the growth rate in the Markov-perfect equilibrium. Particularly, the model shows that the tendency of free-ride rises with more countries in the competition. The more general models with durable physical capital, and with the endogenous rate of time preference following Uzawa-Epstein tradition, also prove these conclusions.; The second essay turns to the Samuelson-Diamond overlapping generation paradigm, a finite-horizon overlapping generations model with education proposed by Michel (1993). The focus is shifted to the effect of trade on growth. It turns out that when trade affects the formation of human capital, endogenous growth is possible even in the simplest economy with a single sector and constant returns to scale technologies, which is opposite from Boldrin's (1992) and Jones and Manuelli's (1992) results.; While the existing theory of trade under oligopolistic competition is mostly static in nature, the third essay fills this gap by modeling international trade under oligopoly in a dynamic setting. This essay adopts the dynamics in the model provided by allowing the demand curve to shift over time as a result of “habit formation”. It shows that when the importing country is committing to a policy of voluntary import expansions (VIEs), in the certain condition (i.e. k > 1), VIEs can improve the global welfare, the welfare of the importing country, and the profit of both firms. So, in a sense, voluntary import expansion is truly voluntary.