Does globalization foster economic growth?

Tadashi Morita (t-morita@kindai.ac.jp), Hajime Takatsuka (takatsuka@gsm.kagawa-u.ac.jp) and Kazuhiro Yamamoto
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Hajime Takatsuka: Graduate School of Management, Kagawa University

No 12-11, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This article focuses on two distinct faces of globalization: the decrease in trade costs of goods and the decline of affiliation costs of joint ventures by foreign firms with local firms. The decrease of affiliation costs drives relocation of firms from the North to the South. When the market size of the North is relatively small (resp. large), the growth rate monotonously decreases (resp. first decreases and rises after this) with a decline of affiliation costs. In the case of lowering trade costs, the firm share in the North evolves as a U-shaped curve (resp. monotonously increases) when the market size of the North is relatively small (resp. large). Growth rates are raised with agglomeration in the North. Finally, we present some welfare implications.

Keywords: trade costs; affiliation costs; growth rates; innovation sector (search for similar items in EconPapers)
JEL-codes: F0 O31 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2012-06
New Economics Papers: this item is included in nep-pbe
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Journal Article: Does Globalization Foster Economic Growth? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1211

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