North-South Trade and Economic Growth

Paul Segerstrom and Elias Dinopoulos

No 5887, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper develops a dynamic general equilibrium model of North-South trade and economic growth. Both innovation and imitation rates are endogenously determined as well as the degree of wage inequality between Northern and Southern workers. Northern firms devote resources to innovative R&D to discover higher quality products and Southern firms devote resources to imitative R&D to copy state-of-the-art quality Northern products. The steady-state equilibrium and welfare implications of three aspects of globalization are studied: increases in the size of the South (i.e., countries like China joining the world trading system), stronger intellectual property protection (i.e., the TRIPs agreement that was part of the Uruguay Round) and lower trade costs.

Keywords: North-south trade; Economic growth; Globalization; Trade costs; Welfare (search for similar items in EconPapers)
JEL-codes: F12 F43 O31 O34 (search for similar items in EconPapers)
Date: 2006-10
New Economics Papers: this item is included in nep-cna, nep-dev, nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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