Three essays on economic growth and trade

The following three essays deal with salient issues concerning economic growth and international trade. The first essay analyzes the efficiency of R&D activities and its implication on the economic growth and welfare. Considering explicitly both wasteful and beneficial aspects of a preemptive R&D competition enables me to relate the intensity of the competition to the efficiency of R&D, technological progress and the economic growth. I show that the number of research firms and the rate of growth is lower than optimal, when the resulting social benefits outweigh the social wastes in the R&D process. The R&D competition is not competitive enough to induce an efficient level of research efforts in this case. Subsidizing the competitive R&D efforts financed through imposing tax on the monopolist innovator will help attain the efficiency in the R&D process. On the contrary, when the resulting social benefits are overcome by the social wastes, the number of research firms is greater and the rate of growth is lower than optimal.;The second essay highlights a link between international R&D competition, patterns of trade, and economic growth. Research firms compete internationally for the monopoly over a production technology. The R&D sector competes with the manufacturing goods sector for human capital factors. I examine the pattern of trade between two large innovating countries competing to be the technological leader. I show that the leader will export the production technology and traditional goods while the follower will export manufacturing goods. The model implies an absolute convergence to a higher rate of growth among advanced countries with a global R&D competition and a free trade in the production technology.;The third essay focuses on the role that the quality of human capital plays in a general equilibrium growth model. If the quality of human capital is improved by allocating more resources in the schooling process, the effect of increased resources used in the schooling process on the quality of human capital should be weighed against the reverse effect of increased schooling cost. I show that appropriate tax-subsidy tools can be designed to alleviate this reverse effect.