Endogenious Technological Change in a Neoclassical Growth Model of a Small Open Economy

Abstract

This paper develops an open-economy growth model by augmenting the standard neoclassical growth model. It explores the various channels through which the export sector contributes to long-run per capita income growth of a small developing economy. The model shows that, depending on the rate of expansion of the export sector, an economy can experience positive growth rate in per capita income even in the long run. Thus, the model's predictions are consistent with the spectacular growth performance of the Asian NICs. (F43, O40)