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Learning, experience and the dynamics of north-south Trade and technology transfer

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  • Benarroch Michael
  • James Gaisford

Abstract

This paper examines the dynamics of learning and experience that underlie technology transfer using a North-South trade model with a continuum of goods. Since North is historically more experienced than South, it initially produces the most advanced goods and pays higher wages. Whenever there is a market-driven transfer of technology and production over time, there will be some wage convergence as South gradually gains experience. Nevertheless, wage inequality must persist in the steady state. Product innovation typically increases steady-state wage inequality because new goods are produced in North, and North ultimately learns than South. [F12, O19]

Suggested Citation

  • Benarroch Michael & James Gaisford, 2002. "Learning, experience and the dynamics of north-south Trade and technology transfer," International Economic Journal, Taylor & Francis Journals, vol. 16(2), pages 65-83.
  • Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:65-83
    DOI: 10.1080/10168730200000014
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
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    3. Grossman, Gene M. & Helpman, Elhanan, 1995. "Technology and trade," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 25, pages 1279-1337 Elsevier.
    4. Matsuyama, Kiminori, 1996. "Why Are There Rich and Poor Countries? Symmetry-Breaking in the World Economy," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 419-439, December.
    5. Taylor, M. Scott, 1993. "'Quality ladders' and Ricardian trade," Journal of International Economics, Elsevier, vol. 34(3-4), pages 225-243, May.
    6. Heling Shi & Xiaokai Yang, 2006. "A New Theory Of Industrialization," World Scientific Book Chapters,in: Inframarginal Contributions To Development Economics, chapter 17, pages 437-460 World Scientific Publishing Co. Pte. Ltd..
    7. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 190-207.
    8. Stiglitz, Joseph E, 1989. "Markets, Market Failures, and Development," American Economic Review, American Economic Association, vol. 79(2), pages 197-203, May.
    9. Kenneth J. Arrow, 1962. "The Economic Implications of Learning by Doing," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 155-173.
    10. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Michael Benarroch & James Gaisford, 2001. "Export-promoting production subsidies and the dynamic gains from experience," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(3), pages 291-320.

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