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Technological Innovation, Capital Mobility, and the Product Cycle in North-South Trade

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  • Dollar, David

Abstract

This paper constructs a general equilibrium model of North-South tradein which the North continually introduces new goods. The rate at whichtechnology diffuses to the South is a function of differences in the cost of production in the two regions. The key result of the model is that labor force growth in the South initially increases real wages inthe North (a standard result in classical trade models), but in the long run reduces Northern wages by accelerating the transfer of technology and drawing capital out of the North as well. Copyright 1986 by American Economic Association.
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  • Dollar, David, 1983. "Technological Innovation, Capital Mobility, and the Product Cycle in North-South Trade," Working Papers 83-31, C.V. Starr Center for Applied Economics, New York University.
  • Handle: RePEc:cvs:starer:83-31
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    File URL: http://econ.as.nyu.edu/docs/IO/9400/RR83-31.pdf
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