The Impact of Geopolitical Conflicts on Trade, Growth, and Innovation

Carlos Góes · Eddy Bekkers

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Global trade and economics Economic Growth and Productivity Economic and Technological Innovation

Abstract

Geopolitical conflicts have increasingly been a driver of trade policy. We study the potential effects of global and persistent geopolitical conflicts on trade, technological innovation, and economic growth. In conventional trade models the welfare costs of such conflicts are modest. We build a multi-sector multi-region general equilibrium model with dynamic sector-specific knowledge diffusion, which magnifies welfare losses of trade conflicts. Idea diffusion is mediated by the input-output structure of production, such that both sector cost shares and import trade shares characterize the source distribution of ideas.

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1990Endogenous Technological Change 2003The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity 1980Theory of International Politics 1990Scale Economies, Product Differentiation, and the Pattern of Trade 2013The China Syndrome: Local Labor Market Effects of Import Competition in the United States 1969A Theory of Demand for Products Distinguished by Place of Production (Une theorie de la demande de produits differencies d'apres leur origine) (Una teoria de la demanda de productos distinguiendolos segun el lugar de produccion)2003Plants and Productivity in International Trade 2012New Trade Models, Same Old Gains?

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