Trade and Uneven Growth

Robert Feenstra

No 3276, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We consider trade between two countries of unequal size, where the creation of new intermediate inputs occurs in both. We assume that the knowledge gained from R&D in one country does not spillover to the other. Under autarky, the larger country would have a higher rate of product creation. When trade occurs in the final goods, we find that the smaller country has its rate of product creation stowed, even in the long run. In contrast, the larger country enjoys a temporary increase in its rate of R&D. We also examine the welfare consequences of trade in the final goods, which depend on whether the intermediate inputs are traded or not.

Date: 1990-03
Note: ITI IFM
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Citations: View citations in EconPapers (29)

Published as Journal of Development Economics, Vol. 49, no. 1 (April 1996): 229-256.

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Related works:
Journal Article: Trade and uneven growth (1996)
Working Paper: TRADE AND UNEVEN GROWTH (1990)
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