INTERNATIONAL SPILLOVERS OF KNOWLEDGE AND SECTORAL PRODUCTIVITY GROWTH - SOME EVIDENCE FOR CANADA AND THE UNITED-STATES

This paper develops and tests a hua-country model of a monopolisticall y competitive industry in which the production function shifts endogen ously via national and international spillovers of knowledge. The basi c version of this model implies that, in the long run, the growth rate of sectoral productivity is the same in each country. In support of t his version, for a number of matched Canadian and US manufacturing ind ustries, the paper finds that these two countries' rates of sectoral p roductivity growth tend to converge despite marked international diffe rences in R and D.