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

Julian di Giovanni, Andrei Levchenko and Jing Zhang ()

No 625, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: This paper evaluates the global welfare impact of ChinaÕs trade integration and technological change in a quantitative Ricardian-Heckscher-Ohlin model implemented on 75 countries. We simulate two alternative productivity growth scenarios: a ÒbalancedÓ one in which ChinaÕs productivity grows at the same rate in each sector, and an ÒunbalancedÓ one in which ChinaÕs 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 ChinaÕs 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 ChinaÕs trade integration.

Keywords: China; productivity growth; international trade (search for similar items in EconPapers)
JEL-codes: F11 F43 O33 O47 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2012-02-14
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Downloads: (external link)
http://www.fordschool.umich.edu/rsie/workingpapers/Papers601-625/r625.pdf

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