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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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    1. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," Review of Economic Studies, Oxford University Press, vol. 83(1), pages 87-117.
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    9. Costas Arkolakis & Arnaud Costinot & Andres Rodriguez-Clare, 2012. "New Trade Models, Same Old Gains?," American Economic Review, American Economic Association, vol. 102(1), pages 94-130, February.
    10. Ghosh, Madanmohan & Rao, Someshwar, 2010. "Chinese accession to the WTO: Economic implications for China, other Asian and North American economies," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 389-398, May.
    11. Ju, Jiandong & Yang, Xuebing, 2009. "Hicks theorem: Effects of technological improvement in the Ricardian model," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 239-247, March.
    12. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 1-44.
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