GLOBAL ECONOMIC GROWTH, ELASTIC LABOR SUPPLY, KNOWLEDGE UTILIZATION AND CREATION WITH LEARNING-BY-DOING

This paper studies issues related to global economic growth, trade patterns and elastic labor supply with capital accumulation and knowledge creation. Trade patterns among countries are determined by free competition and knowledge accumulation is through learning by doing. This study considers knowledge as public good. Knowledge is accessible to all the people in the world, even though different countries apply knowledge with different efficiencies. The countries differ in preference (such as propensities to save and to use leisure time), knowledge utilization efficiency and creativity. First, we show that the dynamics of the J-country world economy is described by (J+1) differential equations. Then, we simulate the motion of the global economy with three economies, respectively called developed, industrializing, and underdeveloped economies. We carry out comparative dynamic analysis with regard to changes in knowledge utilization efficiency.