Flows of People, Flows of Ideas, and the Inequality of Nations.
The last decade has witnessed a lively academic debate about the influence of trade on economic growth. Several high profile contributions have documented that trade appears to have only a secondary impact on growth, once the role of institutions and geography has been taken into account. However, recent research by Thomas Barnebeck Andersen (University of Southern Denmark) and Carl-Johan Dalgaard argues that another dimension of international interaction may be as important - perhaps even more important - than cross-border flows of goods: cross-border flows of people. The key empirical result of the article is that international interaction, when measured as travel intensity, appears to have a strong impact on aggregate productivity, even conditional on geographic circumstances and institutional quality. The paper has just appeared in the March issue of Journal of Economic Growth.