The effects of trade-related policy on growth and welfare.

The three essays in this dissertation explore the links between a more open trade regime and growth. In my first essay, I present a neoclassical model with a consumption good and an investment good. I show that trade will lead to medium run growth through factor accumulation only if the import is the investment good. This is a robust result and holds true both for the case in which the savings rate is a constant and for the case in which the savings rate is derived from an inter-temporal optimization problem of the representative household. This implies that static income gains alone are not sufficient for growth even when the savings rate is a constant. This is contrary to claims that have sometimes been made in the literature. My second essay is motivated by my first. Theoretically, capital goods imports seem to be an important link between trade and growth. A more liberal trade policy may lead to growth simply because it allows the import of sophisticated or high technology capital goods which the less developed countries cannot produce themselves. This paper investigates whether there is any empirical evidence for this hypothesis. I find a significant and strong positive relation between the fraction of imported equipment in investment and growth for a sample of less developed countries. My third essay deals with the effects of enforcement of intellectual property rights (IPRs) in less developed countries. A stricter enforcement of IPRs results in a tradeoff, especially for LDCs, between higher innovation and a lower diffusion of technology. I use a model with endogenous growth and trade to determine the circumstances under which IPR enforcement will be beneficial or harmful to less developed and developed countries. I find that while IPR enforcement will benefit the North in most cases, it will benefit the South only when it is large and imitation rates are high.Ph.D.Economic theoryEconomicsSocial SciencesUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/130062/2/9712033.pd