Economic Transformation and Sustainable Development through Multilateral Free Trade Agreements

Jaewon Jung
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Jaewon Jung: School of Business and Economics, Dankook University, Yongin 16890, Korea

Sustainability, 2021, vol. 13, issue 5, 1-17

Abstract: For sustainable economic development, a continuous and successful economic transformation is critical, and supporting economic transformation requires a better understanding of the close interaction between technology and skill at the micro- and macro-levels. The technology-skill links should especially be important in today’s globalized world. This paper develops a large-scale global Computable General Equilibrium (CGE) model by incorporating recent theoretical advances in international trade: Heterogeneous workers endogenously sort into different technologies based on their comparative advantage, and aggregate productivity is determined by skill-technology assignment in equilibrium. We then calibrate our model to a real-world data set, and investigate how multilateral free trade agreements affect individual member states, as well as outside countries and regions in the case of the Regional Comprehensive Economic Partnership (RCEP). Overall, the results show considerable real productivity gains and economic transformation effects, due to technology-upgrading mechanisms.

Keywords: economic transformation; sustainable development; multilateral free trade agreements; regional comprehensive economic partnership (RCEP); worker and firm heterogeneity; technology upgrading; endogenous aggregate productivity; computable general equilibrium (CGE) model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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