Wake up and smell the ginseng: The rise of incremental innovation in low-wage countries

Diego Puga and Daniel Trefler

Working Papers from University of Toronto, Department of Economics

Abstract: Increasingly, a small number of low-wage countries such as China and India are involved in innovation -- not 'big ideas' innovation, but the constant incremental innovations needed to stay ahead in business. We provide some evidence of this new phenomenon and develop a model in which there is a transition from old-style product-cycle trade to trade involving incremental innovation in low-wage countries. We explain why levels of involvement in innovation vary across low-wage countries and even across firms within each low-wage country. We then draw out implications for the location of production, trade, capital flows, earnings and living standards.

Keywords: international trade; low-wage country innovation (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005-10-26
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Wake Up and Smell the Ginseng: The Rise of Incremental Innovation in Low-Wage Countries (2005)
Working Paper: Wake Up and Smell the Ginseng: The Rise of Incremental Innovation in Low-Wage Countries (2005)
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