Resources,innovationandgrowthintheglobaleconomy

The relativeperformanceofopeneconomiesisanalyzedinanendogenousgrowth modelwithasymmetrictrade.Aresource-richcountrytradesresource-basedinter- mediatesforfinalgoodsproducedbyaresource-pooreconomy.Theeffectsofan increaseintheresourceendowmentdependontheelasticityofsubstitutionbetween resourcesandlaborinintermediates’production.Undersubstitution(complementar- ity), theresourceboomgenerateshigher(lower)income,lower(higher)employmentin the primarysectorandfaster(slower)growthintheresource-richeconomy.Inthe resource-pooreconomy,theshockinducesahigher(lower)relativewageandpositive (negative)growtheffectsthatareexclusivelyduetotrade