INNOVATION, IMITATION, AND THE NATURE OF ECONOMIC GROWTH

This study demonstrates that the evolution of aggregate productivity in an economy, relative to a technology frontier such as the United States, determines the nature of economic growth for this economy, i.e., whether growth is driven primarily by innovation or imitation. The estimating equation is an autoregressive one and is structural in the sense that it identifies innovation and imitation parameters of an economy. The estimates for 85 countries that use UNIDO’s relative productivity data for the period of 1960-2000 show that there exists an innovation-imitation curve over which countries with superior productivity growth performance are located, i.e., a growth frontier. The distance from this growth frontier for a country is a two-dimensional measure of how poorly this country performs with respect to productivity growth. Interestingly, countries in both groups, i.e., the ones located over the growth frontier and define it and the others located away, exhibit considerable within-group variation in terms of innovation and imitation parameters