Trapped factors and China’s impact on global growth

Nicholas Bloom, Paul Romer, Stephen Terry and John van Reenen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: After a recent increase in Chinese import competition, European firms increased innovation. We present and rationalise these patterns using “trapped factors” at the micro level within a stylised equilibrium model of product-cycle trade and growth. Trade integration of the magnitude observed between the OECD and low-wage nations as a whole can considerably increase the long-run growth rate and welfare. In the short-run exposed firms devote trapped factors to increased innovation, leading both to increased innovation at these individual firms as well as to a small amount of extra transitional growth overall. China accounts for half of the dynamic trade gains

JEL-codes: C23 D92 E22 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2020
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Published in Economic Journal, 2020. ISSN: 0013-0133

Downloads: (external link)
http://eprints.lse.ac.uk/105013/ Open access version. (application/pdf)

Related works:
Journal Article: Trapped Factors and China’s Impact on Global Growth (2021)
Working Paper: Trapped factors and China’s impact on global growth (2015)
Working Paper: Trapped Factors and China's Impact on Global Growth (2014)
Working Paper: Trapped Factors and China's Impact on Global Growth (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:105013

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