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Can the North-South trade regime explain intra- and inter-country productivity differences?

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Author Info

  • Oscar Afonso
  • Rui Henrique Alves

Abstract

The literature identifies North-South disparities in Total Factor Productivity (TFP), which, in turn, justify the bulk of international income differences. By building a dynamic, general equilibrium model of North-South technological-knowledge diffusion with scale-invariant growth, we extend the literature in several directions: (i) growth is driven by Schumpeterian R&D and by high and low-skilled human-capital accumulation; (ii) three trade regimes are considered; (iii) sectoral and aggregate TFP measures are computed; (iv) the extent to which the North-South trade regime explains intra-country TFP and inter-country TFP differences is evaluated. In particular, the results suggest that intra-country TFP differences increase and inter-country TFP differences fall when countries are more interdependent.

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Bibliographic Info

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

Volume (Year): 17 (2008)
Issue (Month): 4 ()
Pages: 561-595

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Handle: RePEc:taf:jitecd:v:17:y:2008:i:4:p:561-595

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Related research

Keywords: technological-knowledge diffusion; North-South trade; R&D; human-capital accumulation; TFP differences;

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Cited by:
  1. Nuno Torres & Óscar Afonso & Isabel Soares, 2013. "Manufacturing skill-biased wage inequality, natural resources and institutions," CEF.UP Working Papers 1303, Universidade do Porto, Faculdade de Economia do Porto.

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