Endogenous growth and the openness of economy to trade

Abstract EN

-In this paper, the impact of the imported intermediate inputs on the economic growth of an open economy to trade is examined.

It has been argued that the production function of an open economy to trade in foreign supplies should include the intermediate inputs in addition to the domestic primary factors of production.

For an open economy, the optimal growth rate has been derived based on gross output production function with endogenous technological progress to identify the effect of the imported intermediate inputs on economic growth.

The model suggests that a decision to open the economy to trade is beneficial for economy with low stock of human capital devoted to technological improvements