Essays on the effects of integration on labour markets, r&d, trade and growth

This thesis is composed of four core chapters looking at the effects of product market integration on a country's performance in terms of innovation, exports and growth.Chapter 2, "Trade Liberalisation and Innovative Success with Unionised Labour Markets", examines the effects of trade liberalisation on the incentive for firms to innovate where there are unionised labour markets. It shows how institutional differences between countries can lead to differences in both innovative performance and how product market integration affects innovative performances. In particular, it is shown that integration mitigates the negative effect that unions have on innovation.Chapter 3, "Trade Liberalisation, Static and Dynamic Competition", uses empirical evidence to assess the impact of increasing integration on the role played by low wages and fast innovation in determining a country's ability to compete on the international markets. There is evidence that increasing globalisation of production and technological spillovers, linked with increasing trade, reduces the importance of innovation in determining market shares only in low technology industrial sectors; while it increases only in technology intensive sectors.Chapter 4, "Integration, Spillovers, Concentration and Growth", shows the effect of integration on growth and welfare in a model where market structure is endogenous and IRS are internal to the firm. Integration is modelled as both a reduction of transport costs and an increase in the flow of ideas between countries. It is found that integration might have a non linear effect on growth. It increases concentration and has an ambiguous effect on welfare. Finally it is shown that, as long as the number of firms in the market is large enough, a world characterised by free exchange of ideas but no trade grows faster than a world characterised by free trade but no exchange of knowledge.Finally, Chapter 5, "Trade Liberalisation and Growth: the Market Access Advantage", shows the impact of integration on growth via the home market effect. It is shown that when countries specialise according to their home market advantage, integration has a positive effect on growth. Yet, there is a discontinuity at free trade.