Population, Technological Progress and the Welfare of the North-South Trade: A Revisit of the Classic Ricardian Model

Yuqing Xing and Bo Zhang ()
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Bo Zhang: School of Economics, Peking University, Beijing

No 18-10, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: This paper analyzes how the technology progress of the South country affects the welfare of the North country in a free trade world. Using the standard Ricardian model of the North-South trade, we show that, import biased technological progress of the South will undermine the welfare of the North, once the cumulative technological progress of the South exceeds a threshold. The relative population size of the South to North affects the threshold. Generally, a relatively larger South country has a lower threshold and the technological difference between the two countries remains even beyond the threshold. To a certain extent, the findings of the paper offer an theoretical explanation about the concerns of rising China in an integrated world economy.

Pages: 13 pages
Date: 2018-09
New Economics Papers: this item is included in nep-dem and nep-int
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