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Population, Technological Progress and the Welfare of the North-South Trade: A Revisit of the Classic Ricardian Model

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Listed:
  • Yuqing Xing

    (National Graduate Institute for Policy Studies, Tokyo, Japan)

  • Bo Zhang

    (School of Economics, Peking University, Beijing)

Abstract

This paper analyzes how the technology progress of the South country affects the welfare of the North country in a free trade world. Using the standard Ricardian model of the North-South trade, we show that, import biased technological progress of the South will undermine the welfare of the North, once the cumulative technological progress of the South exceeds a threshold. The relative population size of the South to North affects the threshold. Generally, a relatively larger South country has a lower threshold and the technological difference between the two countries remains even beyond the threshold. To a certain extent, the findings of the paper offer an theoretical explanation about the concerns of rising China in an integrated world economy.

Suggested Citation

  • Yuqing Xing & Bo Zhang, 2018. "Population, Technological Progress and the Welfare of the North-South Trade: A Revisit of the Classic Ricardian Model," GRIPS Discussion Papers 18-10, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:18-10
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    References listed on IDEAS

    as
    1. 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.
    2. Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
    3. Alan V. Deardorff, 2007. "The Ricardian Model," Working Papers 564, Research Seminar in International Economics, University of Michigan.
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