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Title: The Global Welfare Impact of China: Trade Integration and Technological Change

Author(s): Julian di Giovanni, Andrei A. Levchenko and Jing Zhang

Publication Date: October 2013

Keyword(s): China, International Trade and Productivity growth

Programme Area(s): Development Economics, International Macroeconomics and International Trade and Regional Economics

Abstract: This paper evaluates the global welfare impact of China's trade integration and technological change in a multi-country quantitative Ricardian-Heckscher-Ohlin model. We simulate two alternative growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in which China's comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson 2004), the large majority of countries experience significantly larger welfare gains when China's productivity growth is biased towards its comparative disadvantage sectors. This finding is driven by the inherently multilateral nature of world trade.

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Bibliographic Reference

di Giovanni, J, Levchenko, A and Zhang, J. 2013. 'The Global Welfare Impact of China: Trade Integration and Technological Change'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9683