The Global Welfare Impact of China: Trade Integration and Technological Change

Julian di Giovanni, Jing Zhang and Andrei Levchenko

No 2012/079, IMF Working Papers from International Monetary Fund

Abstract: This paper evaluates the global welfare impact of China's trade integration and technological change in a quantitative Ricardian-Heckscher-Ohlin model implemented on 75 countries. We simulate two alternative productivity growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in which China's comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson, 2004), the large majority of countries in the sample, including the developed ones, experience an order of magnitude larger welfare gains when China's productivity growth is biased towards its comparative disadvantage sectors. We demonstrate both analytically and quantitatively that this finding is driven by the inherently multilateral nature of world trade. As a separate but related exercise we quantify the worldwide welfare gains from China's trade integration.

Keywords: WP; unbalanced growth; China; productivity growth; international trade; comparative advantage; growth scenario; export basket; trade cost; technology compare; productivity estimate; sectoral productivity; price level; export share; s distance; Productivity; Wages; Trade balance; Exports; Sustainable growth; Global; South Asia; East Asia; Middle East; North Africa (search for similar items in EconPapers)
Pages: 62
Date: 2012-03-01
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: The Global Welfare Impact of China: Trade Integration and Technological Change (2014)
Working Paper: The Global Welfare Impact of China: Trade Integration and Technological Change (2013)
Working Paper: The global welfare impact of China: trade integration and technological change (2013)
Working Paper: The global welfare impact of China: Trade integration and technological change (2013)
Working Paper: The Global Welfare Impact of China: Trade Integration and Technological Change (2012)
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