Teach Your Children Well: Planting the Seeds of Education and Harvesting the Benefits of Trade", unpublished working paper

The dynamic multi-country model developed in this paper focuses on the interaction between education, international trade and economic growth. The model distinguishes between two forms of human capital, knowledge and education. Both are required in production. Knowledge is accumulated in each country, with trade acting as a conduit for its dissemination. Education is embodied in the individuals and regulates the amount of domestic knowledge that they may create, and the amount of foreign knowledge that they may be able to absorb and assimilate. Individuals choose how much time to spend in production and how much in the attainment of education. Education is financed through income taxes and tariffs levied on imports. The objective is to examine how commercial and education policies may affect the extent of knowledge spillovers across countries, and the extent that these spillovers are captured by a given country. Earlier studies by this author have highlighted a number of empirical regularities of the growth process. The goal here is to develop a theoretical framework than can account for this empirical evidence while providing an indication of how policy changes might affect the future growth paths of nations