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Theoretical and Applied Economics
No. 2 / 2021 (627), Summer

Export supporting strategy, distance to frontier and economic growth

Birgit KIRSCHBAUM-BEHL
University of Greifswald, Greifswald, Germany

Abstract. This paper analyses the influence of an export supporting policy on the technical progress of a country. The model is closely related to the model by Acemoglu et al. (2006) which constitutes the context between growth and the distance to the world technology frontier but modified considering import and export sector of a small economy. An export supporting strategy is introduced which increases the project size in the export sector. It shows that the project size is an influencing factor for the outcome and the growth of the technological knowledge. An economy benefits from trade in every stage of development. Furthermore, technological small and big countries are distinguished and analyzed, which are confronted with the exogenous world technology frontier or rather to the endogenous world technology frontier. In both cases the economy benefits by trade.

Keywords: growth, trade, distance to frontier, developing countries.

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