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Globalization, rent protection institutions, and going alone in freeing trade

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  • Grieben, Wolf-Heimo
  • Sener, Fuat

Abstract

We construct a two-country North-South Product-cycle model of trade with endogenous growth and trade barriers. We remove the scale effects on growth by incorporating rent protection activities by Northern incumbents. We examine the effects of two forms of globalization - an expansion of the relative size of the South and unilateral trade liberalization by either country. We find that the location of rent protection institutions and the sectoral trade structure determine whether or not globalization raises steady-state economic growth. We demonstrate that for accelerating worldwide economic growth, contrary to conventional wisdom, unilateral Northern trade liberalization is preferable to bilateral trade liberalization.

Suggested Citation

  • Grieben, Wolf-Heimo & Sener, Fuat, 2009. "Globalization, rent protection institutions, and going alone in freeing trade," European Economic Review, Elsevier, vol. 53(8), pages 1042-1065, November.
  • Handle: RePEc:eee:eecrev:v:53:y:2009:i:8:p:1042-1065
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    Cited by:

    1. Lin, Hwan C., 2013. "Optimal Patent Life in a Variety-Expansion Growth Model," MPRA Paper 49790, University Library of Munich, Germany.
    2. Tatsuro Iwaisako & Kazuyoshi Ohki, 2015. "Innovation by Heterogeneous Leaders," Discussion Papers in Economics and Business 15-30-Rev., Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Apr 2018.
    3. Elias Dinopoulos & Wolf-Heimo Grieben & Fuat Sener, 2012. "The Conundrum of Recovery Policies: Growth or Jobs?," Working Paper Series of the Department of Economics, University of Konstanz 2012-03, Department of Economics, University of Konstanz.
    4. Tanaka, Hitoshi & Iwaisako, Tatsuro, 2014. "Intellectual property rights and foreign direct investment: A welfare analysis," European Economic Review, Elsevier, vol. 67(C), pages 107-124.
    5. Iwaisako, Tatsuro & Tanaka, Hitoshi & Futagami, Koichi, 2011. "A welfare analysis of global patent protection in a model with endogenous innovation and foreign direct investment," European Economic Review, Elsevier, vol. 55(8), pages 1137-1151.
    6. Finn Martensen, 2013. "Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects," Working Paper Series of the Department of Economics, University of Konstanz 2013-16, Department of Economics, University of Konstanz.
    7. Wolf-Heimo Grieben & Fuat Sener, 2009. "Labor Unions, Globalization, and Mercantilism," CESifo Working Paper Series 2889, CESifo Group Munich.
    8. Furukawa, Yuichi, 2013. "The struggle to survive in the R&D sector: Implications for innovation and growth," Economics Letters, Elsevier, vol. 121(1), pages 26-29.
    9. Wolf-Heimo Grieben & Fuat Sener, 2012. "North-South Trade, Unemployment and Growth: What’s the Role of Labor Unions?," Working Paper Series of the Department of Economics, University of Konstanz 2012-06, Department of Economics, University of Konstanz.
    10. repec:eee:reecon:v:71:y:2017:i:3:p:564-587 is not listed on IDEAS
    11. Venturini, Francesco, 2012. "Looking into the black box of Schumpeterian growth theories: An empirical assessment of R&D races," European Economic Review, Elsevier, vol. 56(8), pages 1530-1545.
    12. repec:bpj:bejeap:v:17:y:2017:i:2:p:15:n:4 is not listed on IDEAS
    13. repec:eee:reecon:v:71:y:2017:i:3:p:373-383 is not listed on IDEAS

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