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A Model of Technology Gap, Product Cycle, and the Process of Catching Up between the North and the South


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  • Chou, Chien-Fu
  • Shy, Oz
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The paper presents a multi-product two-country overlapping generations model of trade and innovation. The authors show that for a low level of innovation (imitation) in the South, firms in the North innovate at a level which guarantees a long-term technological gap between the North and the South. However, a high innovation level in the South leads to a situation where the South can catch up the North in a finite time. This model differs from the existing literature in two major aspects. (1) Except for the head start of the North they assume that the North and the South are identical with respect to factor endowment and their ability to develop new goods. (2) It is general enough to explain both the product cycle phenomena and catching-up process. Copyright 1991 by The Economic Society of Australia.

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Bibliographic Info

Article provided by The Economic Society of Australia in its journal The Economic Record.

Volume (Year): 67 (1991)
Issue (Month): 198 (September)
Pages: 217-26

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Handle: RePEc:bla:ecorec:v:67:y:1991:i:198:p:217-26

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Cited by:
  1. Currie, David, et al, 1999. "Phases of Imitation and Innovation in a North-South Endogenous Growth Model," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 60-88, January.
  2. Natalia Tabatchnaia-Tamirisa, 1996. "Trade Liberalization and Industry Protection in Russia," Working Papers 199613, University of Hawaii at Manoa, Department of Economics.
  3. Arnold, Lutz G., 2003. "Growth in stages," Structural Change and Economic Dynamics, Elsevier, vol. 14(1), pages 55-74, March.


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