Trade liberalisation and endogenous growth - A q-theory approach

This paper introduces a new approach to the analysis of endogenous growth e ffects and uses it to illustrate two novel trade-and-growth links. The appr oach's simplicity allows us to introduce scale economies and imperfect comp etition into the R&D and financial intermediation sectors of a Romer-Grossm an-Helpman endogenous growth model. We show that trade liberalisation can s timulate growth via a procompetitive effect in the R&D sector and/or financ ial sector. (C) 2000 Elsevier Science B.V. All. rights reserved. JEL classi fication: F43; F13; F12; F36; 04.