Can the North-South trade regime explain intra- and inter-country productivity differences?

Oscar Afonso and Rui Alves

The Journal of International Trade & Economic Development, 2008, vol. 17, issue 4, 561-595

Abstract: The literature identifies North-South disparities in Total Factor Productivity (TFP), which, in turn, justify the bulk of international income differences. By building a dynamic, general equilibrium model of North-South technological-knowledge diffusion with scale-invariant growth, we extend the literature in several directions: (i) growth is driven by Schumpeterian R&D and by high and low-skilled human-capital accumulation; (ii) three trade regimes are considered; (iii) sectoral and aggregate TFP measures are computed; (iv) the extent to which the North-South trade regime explains intra-country TFP and inter-country TFP differences is evaluated. In particular, the results suggest that intra-country TFP differences increase and inter-country TFP differences fall when countries are more interdependent.

Keywords: technological-knowledge diffusion; North-South trade; R&D; human-capital accumulation; TFP differences (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (4)

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DOI: 10.1080/09638190802250365

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