Abstract
International Trade Theory and Growth Economics have always exhibited a parallel evolution. This can be seen best with New Trade Theory and New Economic Growth Theory both shifting their modelling focus to the Dixit-Stiglitz framework of monopolistic competition at the end of the 1980s. Needless to say that the overlap of these disciplines, the study of the ‘impact of international trade on technological change and economic growth’, applies these tools as well. The major works that emerged from this line of research are the seminal contributions of Grossman and Helpman (1991a), Rivera-Batiz and Romer (1991a) and Young (1991). Also the ‘quality ladder approaches’ to endogenous economic growth, that mainly highlighted the Schumpeterian innovation-rent destroying effect of competition (seminal to this are Aghion and Howitt (1992) and Grossman and Helpman (1991a)), are often consulted when talking about the effects of international liberalisation on growth. The main conclusion from this line of argumentation is that trade openness fosters competition and thus entails negative effects for innovation and growth.
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