Working Paper: CEPR ID: DP2291
Authors: Michael Chui; Paul Levine; Joseph Pearlman
Abstract: The paper examines the welfare gains from North-South trade and their distribution. We construct an endogenous growth North-South model with four Southern stages of development as possible equilibria: specialisation in a traditional good; the South in addition copies Northern high-tech manufactured goods; the South begins to innovate in its own right and finally a stage in which the South only innovates, as in the North. We use this model to show that dynamic gains from trade and from Southern development through the stages can create new winners, unskilled workers in the North and possibly skilled workers in the South.
Keywords: gains from trade; distribution; economic growth
JEL Codes: F43; O41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade dynamics (F14) | welfare distribution among different worker groups (I38) |
| south's development stages (O17) | winners among unskilled workers in the north (J79) |
| south's development stages (O17) | winners among skilled workers in the south (J79) |
| knowledge capital (O36) | private investment in R&D (O32) |
| knowledge capital diffusion from north to south (O36) | skilled workers in the south benefiting from trade (F16) |
| degree of patent protection (O34) | effects of trade on welfare (F10) |
| stage of development (O11) | effects of trade on welfare (F10) |