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Title: North-South Trade and Economic Growth

Author(s): Elias Dinopoulos and Paul Segerstrom

Publication Date: October 2006

Keyword(s): economic growth, globalization, North-South trade, trade costs and welfare

Programme Area(s): International Trade and Regional Economics

Abstract: This paper develops a dynamic general equilibrium model of North-South trade and economic growth. Both innovation and imitation rates are endogenously determined as well as the degree of wage inequality between Northern and Southern workers. Northern firms devote resources to innovative R&D to discover higher quality products and Southern firms devote resources to imitative R&D to copy state-of-the-art quality Northern products. The steady-state equilibrium and welfare implications of three aspects of globalization are studied: increases in the size of the South (i.e., countries like China joining the world trading system), stronger intellectual property protection (i.e., the TRIPs agreement that was part of the Uruguay Round) and lower trade costs.

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Bibliographic Reference

Dinopoulos, E and Segerstrom, P. 2006. 'North-South Trade and Economic Growth'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5887