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Can the North-South trade regime explain intra- and inter-country productivity differences?

Author

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  • Oscar Afonso
  • Rui Henrique Alves

Abstract

The literature identifies North-South disparities in Total Factor Productivity (TFP), which, in turn, justify the bulk of international income differences. By building a dynamic, general equilibrium model of North-South technological-knowledge diffusion with scale-invariant growth, we extend the literature in several directions: (i) growth is driven by Schumpeterian R&D and by high and low-skilled human-capital accumulation; (ii) three trade regimes are considered; (iii) sectoral and aggregate TFP measures are computed; (iv) the extent to which the North-South trade regime explains intra-country TFP and inter-country TFP differences is evaluated. In particular, the results suggest that intra-country TFP differences increase and inter-country TFP differences fall when countries are more interdependent.

Suggested Citation

  • Oscar Afonso & Rui Henrique Alves, 2008. "Can the North-South trade regime explain intra- and inter-country productivity differences?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(4), pages 561-595.
  • Handle: RePEc:taf:jitecd:v:17:y:2008:i:4:p:561-595
    DOI: 10.1080/09638190802250365
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    Cited by:

    1. repec:bla:rdevec:v:21:y:2017:i:4:p:e1-e29 is not listed on IDEAS
    2. Afonso, Oscar & Neves, Pedro Cunha & Thompson, Maria, 2016. "The skill premium and economic growth with costly investment, complementarities and international trade of intermediate goods," Japan and the World Economy, Elsevier, vol. 37, pages 73-86.
    3. Nuno Torres & Óscar Afonso & Isabel Soares, 2013. "Manufacturing skill-biased wage inequality, natural resources and institutions," CEF.UP Working Papers 1303, Universidade do Porto, Faculdade de Economia do Porto.

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