Learning-Driven Product Cycles, New Product Adoption and North-South Inequality
This paper examines how key product-cycle parameters, such as the ease of new product adoption and the pace of product obsolescence, influence North-South wage inequality and the trade pattern. An innovative feature of the paper is in modeling the interaction between endogenous Northern product innovation and endogenous production transfers to South with industry specific learning, cross-industry learning spillovers, and product obsolescence. Greater difficulty in adopting new products raises wage inequality while lowering Northern innovation and Southern learning rates. Slowing the pace of product obsolescence reduces wage inequality in the short run, but does the opposite in the long run.
Volume (Year): 27 (2002)
Issue (Month): 1 (June)
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- Dollar, David, 1986.
"Technological Innovations, Capital Mobility, and the Product Cycle inNorth-South Trade,"
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- Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 369-405.
- Stiglitz, Joseph E, 1989. "Markets, Market Failures, and Development," American Economic Review, American Economic Association, vol. 79(2), pages 197-203, May. Full references (including those not matched with items on IDEAS)
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