The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Trade, Technology Diffusion and Growth

  • Jonathan Eaton
  • Samuel Kortum
Reference work entry


Invention is a fundamental driver of growth in living standards around the world. Trade and technology diffusion are two ways the benefit of an invention spreads to other countries. Impediments to diffusion give rise to differences in living standards and to comparative advantage in production, providing an incentive to trade. We review some basic facts. We then provide a simple model of the connections among these processes, showing how it can explain these facts.


Balanced growth Capital goods trade Cobb–Douglas functions Diffusion of technology Economic growth Economic growth in the very long run Endogenous growth International trade Invention Patents Product life cycle Schmookler, J. Technical change 

JEL Classifications

D4 D10 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jonathan Eaton
    • 1
  • Samuel Kortum
    • 1
  1. 1.