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Global Welfare Impact of China: Trade Integration and Technology Change

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  • Jing Zhang

    (University of Michigan)

Abstract

This paper evaluates the global welfare impact of China's trade integration and technological change in a multi-country quantitative Ricardian-Heckscher-Ohlin model. We simulate two alternative growth scenarios: a balanced one in which China's productivity grows at the same rate in each sector, and an unbalanced one in which China's comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson 2004), the large majority of countries experience significantly larger welfare gains when China's productivity growth is biased towards its comparative disadvantage sectors. This finding is driven by the inherently multilateral nature of world trade.

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  • Jing Zhang, 2013. "Global Welfare Impact of China: Trade Integration and Technology Change," 2013 Meeting Papers 630, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:630
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    References listed on IDEAS

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    2. Rod Tyers & Yixiao Zhou, 2019. "Financial Integration and the Global Effects of China's Growth Surge," Economics Discussion / Working Papers 19-01, The University of Western Australia, Department of Economics.
    3. Ferdinando Monte, 2014. "Local Transmission of Trade Shocks," Working Papers 2014-001, Human Capital and Economic Opportunity Working Group.
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    5. Inoue, Atsushi & Jin, Lu & Rossi, Barbara, 2017. "Rolling window selection for out-of-sample forecasting with time-varying parameters," Journal of Econometrics, Elsevier, vol. 196(1), pages 55-67.
    6. Levchenko, Andrei A. & Zhang, Jing, 2014. "Ricardian productivity differences and the gains from trade," European Economic Review, Elsevier, vol. 65(C), pages 45-65.
    7. José A. Tenreiro Machado & Maria Eugénia Mata & António M. Lopes, 2020. "Fractional Dynamics and Pseudo-Phase Space of Country Economic Processes," Mathematics, MDPI, vol. 8(1), pages 1-17, January.

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