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North-South Trade and Economic Growth

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  • Dinopoulos, Elias
  • Segerstrom, Paul

Abstract

This paper develops a dynamic general equilibrium model of North-South trade and economic growth. Both innovation and imitation rates are endogenously determined as well as the degree of wage inequality between Northern and Southern workers. Northern firms devote resources to innovative R&D to discover higher quality products and Southern firms devote resources to imitative R&D to copy state-of-the-art quality Northern products. The steady-state equilibrium and welfare implications of three aspects of globalization are studied: increases in the size of the South (i.e., countries like China joining the world trading system), stronger intellectual property protection (i.e., the TRIPs agreement that was part of the Uruguay Round) and lower trade costs.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5887.

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Date of creation: Oct 2006
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Handle: RePEc:cpr:ceprdp:5887

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Related research

Keywords: economic growth; globalization; North-South trade; trade costs; welfare;

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References

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  1. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, vol. 80(5), pages 1077-91, December.
  2. Pritchett, Lant, 1995. "Divergence, big time," Policy Research Working Paper Series 1522, The World Bank.
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  9. Yang, Guifang & Maskus, Keith E., 2001. "Intellectual property rights, licensing, and innovation in an endogenous product-cycle model," Journal of International Economics, Elsevier, vol. 53(1), pages 169-187, February.
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  29. Aghion, Philippe, et al, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 467-92, July.
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  34. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
  35. Kortum, Samuel, 1993. "Equilibrium R&D and the Patent-R&D Ratio: U.S. Evidence," American Economic Review, American Economic Association, vol. 83(2), pages 450-57, May.
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Citations

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Cited by:
  1. Gilles Koléda, 2005. "Northern and Southern Patent Novelty Requirements Harmonization, Growth and Trade," DEGIT Conference Papers c010_025, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Borota, Teodora, 2010. "Innovation and Imitation in a Model of North-South TradeRecent evidence on world trade patterns reveals North-South specialization across," Working Paper Series 2010:6, Uppsala University, Department of Economics.
  3. Hitoshi Tanaka & Tatsuro Iwaisako & Koichi Futagami, 2006. "Dynamic Analysis of Innovation and International Transfer of Technology through Licensing," Discussion Papers in Economics and Business 06-06-Rev., Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Oct 2006.
  4. Daron Acemoglu & Gino Gancia & Fabrizio Zilibotti, 2010. "Competing engines of growth: Innovation and standardization," Economics Working Papers 1358, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2010.
  5. Shirley J. , HO, 2007. "R&D Outsourcing Contract with Information Leakage," Discussion Papers (ECON - Département des Sciences Economiques) 2007026, Université catholique de Louvain, Département des Sciences Economiques.
  6. Angus C. Chu, 2009. "Macroeconomic Effects of Intellectual Property Rights: A Survey," IEAS Working Paper : academic research 09-A007, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  7. Andrea R. Lamorgese, 2008. "Innovation driven sectoral shocks and aggregate city cycles," Temi di discussione (Economic working papers) 667, Bank of Italy, Economic Research and International Relations Area.
  8. Benedetti Fasil, Cristiana & Borota, Teodora, 2010. "World Trade Patterns and Prices: The Role of Productivity and Quality Heterogeneity," Working Paper Series 2010:7, Uppsala University, Department of Economics.
  9. Schäfer, Andreas & Schneider, Maik T., 2011. "Endogenous enforcement of intellectual property, North-South trade, and growth," Working Papers 96, University of Leipzig, Faculty of Economics and Management Science.
  10. Andreas Schäfer & Maik T. Schneider, 2011. "Endogenous Enforcement of Intellectual Property, North-South Trade, and Growth," CER-ETH Economics working paper series 11/150, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  11. Wolf-Heimo Grieben & Fuat Sener, 2009. "Labor Unions, Globalization, and Mercantilism," CESifo Working Paper Series 2889, CESifo Group Munich.

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