Title Gradual trade liberalization in a North-South model of the product cycle
External publication No
Means J. Econ. Z. Natl.okon.
Scope Article
Nature Científica
JCR Quartile 3
SJR Quartile 1
JCR Impact 1.37300
Area International
Web https://www.scopus.com/inward/record.uri?eid=2-s2.0-85055927688&doi=10.1007%2fs00712-018-0640-2&partnerID=40&md5=13dca84a01fb0e70ad83882d5b611324
Publication date 01/08/2019
ISI 000475672200003
Scopus Id 2-s2.0-85055927688
DOI 10.1007/s00712-018-0640-2
Abstract The catchup and convergence of some developing countries with the Western hemisphere is a major experience in modern history. In this paper we investigate the impact on welfare and convergence of a gradual decay in trade costs within a North-South, product cycle setting. In contrast to the existing literature on product cycles with expanding-product-variety models, we explore analytically the consequences of a gradual globalization at any level of initial trade costs. It is proved that convergence only arises if the size and R&D productivity of the South is sufficiently small, relative to the North. Furthermore, lower trade costs are shown to be always beneficial to both the South and the North, under all relevant parameter values.
Keywords Globalization; North-South convergence; Product cycles; Endogenous growth
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