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Export-promoting production subsidies and the dynamic gains from experience

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Author Info
Michael Benarroch, James Gaisford

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Abstract

This paper examines export-promoting production subsidies in a dynamic product-cycle model with learning by doing and spillovers from experience. History dictates that the South is less experienced than the North and, thus, produces less advanced goods. Non-uniform Southern export promoting production subsidies applied to a small set of marginal industries that are on the verge of being internationally competitive, generate conventional static benefits for the South and costs for the North. Since such an industrial policy expands the South's range of production, it ultimately enhances Southern learning. The South's rate of production and technology transfer and the North's rate of innovation both increase, creating dynamic benefits for each country. While the South must gain overall, the North will also gain if the dynamic benefits outweigh the static costs.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Journal of International Trade & Economic Development.

Volume (Year): 10 (2001)
Issue (Month): 3 (September)
Pages: 291-320
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Handle: RePEc:taf:jitecd:v:10:y:2001:i:3:p:291-320

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Related research
Keywords: International Trade Learning By Doing Production Subsidies Technology Transfer;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Spencer, Barbara J & Brander, James A, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Blackwell Publishing, vol. 50(4), pages 707-22, October. [Downloadable!] (restricted)
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  3. Grossman, Gene M. & Helpman, Elhanan, 1995. "Technology and trade," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 25, pages 1279-1337 Elsevier. [Downloadable!] (restricted)
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  4. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
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  5. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May. [Downloadable!] (restricted)
  6. Teubal, Morris, 1973. "Comparative advantage and technological change: The learning by doing case," Journal of International Economics, Elsevier, vol. 3(2), pages 161-177, May. [Downloadable!] (restricted)
  7. Shi Heling & Yang Xiaokai, 1995. "A New Theory of Industrialization," Journal of Comparative Economics, Elsevier, vol. 20(2), pages 171-189, April. [Downloadable!] (restricted)
  8. James Donald Gaisford & Michael Benarroch, 1998. "Learning, Experience and the Dynamics of North-South Trade and Technology Transfer," Working Papers 1998-02, Department of Economics, University of Calgary, revised 02 Mar 1998.
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  9. Itoh, Motoshige & Kiyono, Kazuharu, 1987. "Welfare-Enhancing Export Subsidies," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 115-37, February. [Downloadable!] (restricted)
  10. Benarroch, M., 1996. "Scale economies, wage differentials, and North-South trade," Journal of Development Economics, Elsevier, vol. 51(2), pages 327-342, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kazuhiko Yokota & Akinori Tomohara, 2009. "Extending the Learning-By-Exporting Hypothesis: Introducing a Credit Constraint," International Advances in Economic Research, Springer, vol. 15(2), pages 169-177, May. [Downloadable!] (restricted)
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