Working Paper: CEPR ID: DP1165
Authors: Patrick Minford; Jonathan Riley; Eric Nowell
Abstract: Development and convergence is explained as the transfer of technology embodied in machinery, to the manufacturing sector of those developing countries that institute the necessary property rights. The process is modelled within a Heckscher-Ohlin-Samuelson framework with capital mobility and endogenous supplies of immobile factors, skilled and unskilled labour and land. The model suggests a factor-price-based PPP method of measuring developing countries' GDP. Model simulations of the assumed technical transfer to developing countries imply falling wages and employment of unskilled labour in developed countries, combined with improvements in their terms of trade - shared gains from trade combined with a distributional bias.
Keywords: development; technological transfer; unemployment; unskilled labour; wage dispersion
JEL Codes: F11; F21; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| secure property rights (P14) | technology transfer (O33) |
| technology transfer (O33) | growth in the manufacturing sector (O14) |
| technology transfer (O33) | falling wages and employment for unskilled labor in developed countries (F66) |
| trade (F19) | technology transfer (O33) |
| technology transfer (O33) | enhanced terms of trade (F14) |
| enhanced terms of trade (F14) | shared gains from trade (F11) |
| trade (F19) | distributional bias benefiting skilled labor (J79) |
| trade (F19) | adverse effects on unskilled labor in developed countries (F66) |