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North-South Trade and Directed Technical Change

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Abstract

In a world where poor countries provide weak protection for intellectual property rights (IPRs), market integration shifts technical change in favor of rich nations. Through this channel, free trade may amplify international income differences. At the same time, integration with countries where IPRs are weakly protected can slow down the world growth rate. An important implication of these results is that protection of intellectual property is most beneficial in open countries. This prediction, which is novel in the literature, is consistent with evidence from a panel of 53 countries observed in the years 1965-1990. The paper also provides empirical support for the mechanism linking North-South trade to the direction of technical change: an increase in import penetration from low-wage, low-IPRs, countries is followed by a sharp fall in R&D investment in a panel of US manufacturing sectors.

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Bibliographic Info

Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 713.07.

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Length: 42
Date of creation: 15 Sep 2007
Date of revision: 27 Jun 2008
Handle: RePEc:aub:autbar:713.07

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Keywords: Economic Growth; North-South Trade; Directed Technical Change; Intellectual Property Rights; Cross-Country Income Differences.;

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References

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Citations

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Cited by:
  1. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing Engines of Growth: Innovation and Standardization," Levine's Working Paper Archive 661465000000000243, David K. Levine.
  2. Gino Gancia & Andreas Müller and Fabrizio Zilibotti, 2010. "Structural Development Accounting," Working Papers 494, Barcelona Graduate School of Economics.
  3. Saint-Paul, Gilles, 2004. "Welfare Effects of Intellectual Property in a North-South Model of Endogenous Growth with Comparative Advantage," CEPR Discussion Papers 4712, C.E.P.R. Discussion Papers.
  4. Dinopoulos, Elias & Segerstrom, Paul, 2010. "Intellectual property rights, multinational firms and economic growth," Journal of Development Economics, Elsevier, vol. 92(1), pages 13-27, May.
  5. Angus Chu & Guido Cozzi & Yuichi Furukawa, . "Effects of Economic Development in China on Skill-Biased Technical Change in the US," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  6. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi, 2012. "From China with love: Effects of the Chinese economy on skill-biased technical change in the US," MPRA Paper 40555, University Library of Munich, Germany.
  7. Gino Gancia, 2012. "Globalization, technology and inequality," Economics Working Papers 1363, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2012.

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