Tariff and FDI Liberalization: What to Expect from China's Entry into the WTO?
This paper presents a model that introduces foreign firms' competition in product and factor markets in an otherwise standard tariff liberalization setting. Pressures on factor markets from more advanced foreign firms undermine the competitive position of native enterprises. The final impact on native firms' employment, the country's comparative advantage and factor returns depend on the size and dispersion of the technology differences, the ability of native firms to imitate more advanced technologies and the final tariff structure. The case of China's entry into the WTO reveals the relevance of this feature, as the elimination of the dual economic structure is mandated by the WTO along with a fall in tariffs. The results show that in the short run the required process of FDI liberalization can generate a substantial impact on the factorial distribution of income and may imply a shift toward a more labor intensive mix of production, depending on the degree of technological imitations. However, nothing can be said with respect to the long run pattern of production.
|Date of creation:||2002|
|Date of revision:|
|Publication status:||Published as "Why Does China Protect its Labour-Intensive Industries More?", The Economics of Transition, 14 (2): 289-319, 2006.|
|Contact details of provider:|| Postal: Avda. Vicuña Mackenna 4860, Macul, Santiago|
Phone: (562) 354-4303
Fax: (562) 553-1664
Web page: http://www.economia.uc.cl
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert C. Feenstra & Wen Hai & Wing T. Woo & Shunli Yao, .
"The U.S.-China Bilateral Trade Balance: It'S Size And Determinants,"
Department of Economics
98-09, California Davis - Department of Economics.
- Robert C. Feenstra & Wen Hai & Wing T. Woo & Shunli Yao, 1998. "The US-China Bilateral Trade Balance: Its Size and Determinants," NBER Working Papers 6598, National Bureau of Economic Research, Inc.
- Wing Thye Woo & Robert Feenstra & Wen Hai & Shunli Yao, 2003. "The U.S.-China Bilateral Trade Balance: It'S Size And Determinants," Working Papers 989, University of California, Davis, Department of Economics.
- George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
- Loren Brandt & Xiaodong Zhu, 2000. "Redistribution in a Decentralized Economy: Growth and Inflation in China under Reform," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 422-451, April.
When requesting a correction, please mention this item's handle: RePEc:ioe:doctra:209. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jaime Casassus)
If references are entirely missing, you can add them using this form.