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on International Trade |
| By: | Novy, Dennis (Department of Economics, University of Warwick) |
| Abstract: | International trade costs are of vital importance because they determine trade patterns and therefore economic performance. This paper develops a new micro-founded measure of international trade costs. It is based on a multi-country general equilibrium model of trade that incorporates bilateral "ice-berg" trade costs. The model results in a gravity equation from which the implied trade costs can be easily computed. The trade cost measure is intuitive, takes multilateral resistance into account and yields empirical results that are economically sensible. It is found that during the post-WorldWar II period trade costs have declined markedly. The dispersion of trade costs across countries can best be explained by geographical and historical factors like distance and colonial linkages but also by tariffs and free trade agreements. |
| Keywords: | Trade Costs ; Gravity ; Distance ; Economic Integration |
| JEL: | F1 F4 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:764&r=int |
| By: | Prabir De |
| Abstract: | Trade costs are often cited as an important determinant of the volume of trade. This paper provides enough evidences to ascertain that today’s trade issues in Northeast Asia go beyond the traditional mechanisms of tariffs, and include “behind-the-border” issues. By estimating a modified gravity equation, controlling for endogeneity and remoteness, we find that variations in transaction costs along with trade infrastructure facilities have significant influence on regional trade flows in Northeast Asia. On average, 10 percent saving in transaction costs increases imports by about 5 percent in Northeast Asia. This paper concludes that when tariffs tend to become low in Northeast Asia, the economies in this region could potentially benefit substantially from higher trade provided trade costs are well controlled. |
| Keywords: | trade costs, transaction costs, infrastructure, regional trade, tariff |
| JEL: | F02 F10 F15 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1809&r=int |
| By: | James Cassing; Anna-Maria Salameh |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:226&r=int |
| By: | Hoekman, Bernard |
| Abstract: | Since the mid 1980s a substantial amount of research has been undertaken on trade in services. Much of this is inspired by the World Trade Organization or regional trade agreements, especially the European Union, but an increasing number of papers focus on the impacts of services sector liberalization. This paper surveys the literature, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade (and liberalization), and efforts to cooperate to achieve such liberalization through trade agreements. It concludes that there is increasing evidence that services liberalization is an important source of potential welfare gains, but relatively little research has been done that can inform the design of international cooperation-both trade agreements and development assistance-so as to more effectively promote development objectives. |
| Keywords: | Economic Theory & Research,Trade and Services,Free Trade,Transport Economics Policy & Planning,ICT Policy and Strategies |
| Date: | 2006–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4030&r=int |
| By: | Meredith Crowley |
| Abstract: | This paper reviews the theoretical and empirical literature on the use of safeguards in a trade agreement. It then analyzes the available data on the use of safeguards by WTO members to examine two hypotheses in the economics literature, that safeguards improve welfare by facilitating tariff reductions and that safeguards improve welfare by providing insurance against adverse economic shocks. I find that countries which undertook larger tariff reductions during the Uruguay Round conducted more safeguards investigations after the WTO was established. However, this result is not robust across all specifications of the model and should not be regarded as definitive. I find no evidence to support the hypothesis that safeguards improve welfare by providing insurance. The empirical analysis rejects the hypothesis of a relationship between safeguards and aggregate uncertainty. |
| Keywords: | General Agreement on Tariffs and Trade (Organization) ; Trade |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-06-06&r=int |
| By: | Bouët, Antoine |
| Abstract: | "Trade liberalization is expected to act positively on development and poverty alleviation, both of which have become a high priority of international community...The objective of this study is to examine the efficiency of trade modeling in capturing the benefits from trade liberalization. It will provide a survey of methodologies utilized to assess the impact of trade liberalization on poverty and will examine the extent to which such assessments diverge. The survey also demonstrates the benefits of “complementary analysis”, which utilizes different methodologies to study a specific topic." from Authors' Abstract |
| Keywords: | Trade modeling, Poverty alleviation, General equilibrium model, Assessment, |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:mtiddp:93&r=int |
| By: | Richard Baldwin |
| Abstract: | This paper addresses the final steps to global free trade -- the political economy forces that might drive them, and the role the WTO might play in guiding them. Two facts form the departure point: 1) Regionalism is here to stay; 2) the motley assortment of regional trade agreements is not the best way to organise world trade. Moving to global duty-free trade will require a multilateralisation of regionalism. The paper presents the political economy logic of trade liberalisation and uses it to structure a narrative of world trade liberalisation since 1947. The logic is then used to project the world tariff map in 2010, arguing that the pattern will be marked by fractals – fuzzy, leaky trade blocs made up of fuzzy, leaky sub-blocs (fuzzy since the proliferation of FTAs makes it impossible to draw sharp lines around the 3 big blocs, and leaky since some FTAs create free trade ’canals’ linking the blocs). The paper then presents a novel political economy mechanism – spaghetti bowls as building blocs – whereby offshoring creates a force that encourages the multilateralisation of regionalism. Finally, the paper suggests three things the WTO could do to help multilateralise regionalism. |
| JEL: | F1 F15 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12545&r=int |
| By: | Cororaton, Caesar B. |
| Abstract: | "This paper looks at how Philippine trade reform which consists of tariff reduction and elimination of quantitative restrictions (QR) on rice imports will affect poverty within two world trade scenarios: Doha and free world trade. The impact of Doha is very small and generates biased effects against agriculture. The impact of Philippine trade reform within the Doha agenda magnifies this biased effect, making rural households worse-off compared to urban households. However, eliminating rice QR generates a set of effects where consumer price reduction dominates nominal income decline. Thus, real income improves and poverty declines across household groups, but the net effects are lower in rural than in urban households. The impact of a free world trade economy is favorable in terms of higher export prices and export demand for agriculture and agriculture-related manufacturing industries. This mitigates the biased effects against agriculture, and is therefore favorable to rural households. However, if Philippine trade reform is added to the analysis, the result switches back to the previous biased effects on agriculture and on rural households." Author's Abstract |
| Keywords: | rice, Impact analysis, Agriculture, Poverty, Computable general equilibrium (CGE), Trade reform, Doha agreement, Free trade, Rural households, Urban households, consumer prices, |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:mtiddp:96&r=int |
| By: | Rakotoarisoa, Manitra A. |
| Abstract: | "High production and export subsidies in developed countries and high protection in both developed and developing countries have distorted rice trade. This study estimates the impact of rice policy distortions on developing countries' rice production and trade potential. Because rice markets are highly segmented, major rice types are differentiated to estimate the impact of current and likely policy reforms. Analysis in long-grain, high-quality rice focuses on rice import and export markets in Latin America and shows that reduction of direct and implicit export subsidies in the US will benefit regional suppliers such as Argentina and Uruguay. Analysis of Indonesia's import market of ordinary long-grain rice, where protection is high, reveals that tariff hikes in this large importing country are in part a response to increased support from the exporting side. Level of domestic stocks also determines tariff movements. In the short/medium grain rice market, this study focuses on the highly supported and protected rice market in Japan and find that only aggressive rates of increase in import tariff-rate quota and reduction in production subsidies would have significant impact on import volume and price. Prices and trade would also be affected by a reduction of the high over-quota tariff." from Authors' Abstract |
| Keywords: | exports, subsidies, Rice trade, Rice markets, tariffs, Imports, |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:mtiddp:94&r=int |
| By: | Alan M. Taylor; Janine L. F. Wilson |
| Abstract: | Do international trade and finance flow together? In theory, trade and finance can be substitutes or complements, so the matter must be resolved empirically. We study trade and financial flows from the United Kingdom from 1870 to 1913 and the United States in the interwar years. Trade and finance are robustly correlated, even after allowing for simultaneity. Evidence from the British Empire casts doubt on the idea that trade is a punishment device in the event of a default. |
| JEL: | F10 F30 F40 N10 N20 N70 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12543&r=int |
| By: | James Cassing; Stephen Tokarick |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:224&r=int |
| By: | Holger Breinlich |
| Abstract: | This paper analyzes mergers and acquisitions (M&A) as a previously neglected channel of industrial restructuring in the face of trade liberalization. Using the Canada-United States Free Trade Agreement of 1989 as a source of exogenous variation in trade barriers, I show that trade liberalization leads to a significant increase in M&A activity. I also provide evidence that resources are transferred from less to more productive firms in the process and that the magnitude of the overall transfer is quantitatively important. Taken together, these results suggest that M&As are an important alternative to the previously studied adjustment channels of firm and establishment closure and contraction. This has strong implications for the design of competition policy in the wake of trade liberalizations since M&As may offer a more efficient way of transferring resources than contraction and closure of low productivity firms combined with internal growth of more efficient firms. |
| Date: | 2006–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:619&r=int |
| By: | Gruère, Guillaume P. |
| Abstract: | "This paper reviews current trade–related regulations of genetically modified (GM) food and discusses their effects on developing countries. There is a large heterogeneity in current import approval and marketing policies of GM food worldwide. At the international level, the harmonization efforts are led by the Codex Alimentarius Commission, the Cartagena Protocol on Biosafety and the World Trade Organization. While internationally harmonized guidelines for safety approval have been finalized, we show that there is no clear consensus on labeling regulations for GM food, and there is an increasing risk of conflicts among international agreements. We analyze the GM food regulations of two large rich importers, Japan and the European Union (EU) and discuss their differences and their potential impact on international trade. We also show that the effects of international and domestic trade related regulations critically depend on the type of traded products and their intended use: food and unprocessed products are subject to more stringent regulations than animal feed and processed products. Finally, we identify the main spillover effects of national and international regulations on developing countries' policy making, and suggest four policy arrangements on GM food to enable developing countries to satisfy production, consumption, international trade, and risk management objectives simultaneously while complying with their international obligations. |
| Keywords: | Genetically modified food Developing countries, Biosafety, Trade regulation, Labeling, International trade, Tariff, |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:eptddp:147&r=int |
| By: | Yochanan Shachmurove (The City College of The City University of New York and Department of Economics, University of Pennsylvania); Uriel Spiegel (Department of Economics, University of Pennsylvania and Department of Economics, Bar Ilan University) |
| Abstract: | Given a world consisting of two countries, two commodities, and two consumers, this paper analyzes the potential effects of the current global trend of shifting world productions with regards to consumer goods. When technological improvements occur in a developing country, would terms of trade remain favorable for a developed country? Would both countries benefit? Instances where one or both countries benefit are feasible. However the developed country may lose as a result of an improvement in the production of the good that previously had been exported by the developed country. |
| Keywords: | International trade, Samuelson, autarky equilibrium, comparative advantage, endowment shock |
| JEL: | F0 F1 O O1 O3 D51 |
| Date: | 2006–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:06-023&r=int |
| By: | Christopher Gust; Sylvain Leduc; Robert J. Vigfusson |
| Abstract: | Over the past twenty years, U.S. import prices have become less responsive to the exchange rate. We propose that a significant portion of this decline is a result of increased trade integration. To illustrate this effect, we develop an open economy DGE model in which trade occurs along both the intensive and extensive margins. The key element we introduce into this environment is strategic complementarity in price setting. As a result, a firm's pricing decision depends on the prices set by its competitors. This feature implies that a foreign exporter finds it optimal to vary its markup in response to shocks that change the exchange rate, insulating import prices from exchange rate movements. With increased trade integration, exporters have become more responsive to the prices of their competitors and this change in pricing behavior accounts for a significant portion of the observed decline in the sensitivity of U.S import prices to the exchange rate. |
| Keywords: | Foreign exchange rates ; Imports - Prices |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:864&r=int |
| By: | Claustre Bajona; Timothy J. Kehoe |
| Abstract: | This paper studies the properties of a dynamic Heckscher-Ohlin model - a combination of a static two-good, two-factor Heckscher-Ohlin trade model and a two-sector growth model - with infinitely lived consumers where international borrowing and lending are not permitted. We obtain two main results: First, even if factor prices are equalized, countries that differ only in their initial endowments of capital per worker may converge or diverge in income levels over time, depending on the elasticity of substitution between traded goods. Divergence can occur for parameter values that would imply convergence in a world of closed economies and vice versa. Second, factor price equalization in a given period does not imply factor price equalization in future periods. |
| JEL: | F11 F43 O15 O41 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12567&r=int |
| By: | Messer, Ellen; Cohen, Marc J. |
| Abstract: | "For more than two centuries, proponents and critics of an open global economy have debated whether the free flows of goods, services, and capital make the world more peaceful and food secure or instead exacerbate inequalities and hardships, fanning interclass or interethnic violence motivated by grievance and greed. Food security and pri-mary agricultural commodities have been largely left out of these discussions; the authors begin to fill these gaps... the paper recommends four agendas for further food policy consideration: first, more attention to equitable outcomes in food distribution and food production and trade programs, so that such food security programs do not further contribute to ethnic divisions favoring violence-prone grievance and greed. Second, more careful scrutiny of national marketing and financial policies that influence farmer and middlemen income, and who benefits from agricultural export crops. Third, the design of some type of compensation fund for sudden or certain “losers” in globalization, who face loss of livelihood and recruitment to violence when cash crops like coffee fail to deliver expected livelihoods. Fourth, and in sum, more systematic use of livelihood-security and rights-based frameworks that address local-level food security in the context of national food policy planning " from Text |
| Keywords: | Hunger, Conflict, war, Globalization, Crops, exports, coffee, Cotton, Human rights, Right to food, Fair trade, |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:fcndbr:206&r=int |
| By: | Claustre Bajona; Timothy J. Kehoe |
| Abstract: | This paper contrasts the properties of dynamic Heckscher-Ohlin models with overlapping generations with those of models with infinitely lived consumers. In both environments, if capital is mobile across countries, factor price equalization occurs after the initial period. In general, however, the properties of equilibria differ drastically across environments: With infinitely lived consumers, we find that factor prices equalize in any steady state or cycle and that, in general, there is positive trade in any steady state or cycle. With overlapping generations, in contrast, we construct examples with steady states and cycles in which factor prices are not equalized, and we find that any equilibrium that converges to a steady state or cycle with factor price equalization has no trade after a finite number of periods. |
| JEL: | F11 F43 O15 O41 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12566&r=int |
| By: | Yinhua Mai |
| Abstract: | In this paper, I use the Monash Multi-Country (MMC) model - a dynamic CGE model of China, Australia and the Rest of the World - to analyse the effects of removing border protection on wheat and rice in China. The analysis points to the possibility that removing border protection on wheat and rice may lead to an increase in rural income in China. This is due mainly to the following two factors. First, while removing border protection on wheat and rice leads to a contraction in agricultural activities, it also leads to an expansion in manufacturing and services activities. Second, on average, rural households in China obtain over half of their income from manufacturing and services activities. |
| Keywords: | China, Wheat and rice, CGE modelling, rural income |
| JEL: | C68 F14 Q17 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cop:wpaper:g-160&r=int |
| By: | Jeffrey G. Williamson |
| Abstract: | In the first global century before 1914, trade and especially migration had profound effects on both low-wage, labor abundant Europe and the high-wage, labor scarce New World. Those global forces contributed to a reduction in unskilled labor scarcity in the New World and to a rise in unskilled labor scarcity in Europe. Thus, it contributed to rising inequality in overseas countries, like the United States, and falling inequality in most of Europe. Falling unskilled labor scarcity and rising skill scarcity contributed to the high school revolution in the US. Rising unskilled scarcity also contributed to the primary schooling and literacy revolution in Europe. Under what conditions would we expect the same responses to globalization in today’s world? This paper argues that modern debates about inequality and schooling responses to globalization should pay more attention to history. |
| JEL: | D3 F1 I2 J6 N3 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12553&r=int |
| By: | Matesanz Gómez, David; Fugarolas Álvarez-Ude, Guadalupe |
| Abstract: | Using multivariate cointegration tests for non-stationary data and vector error correction models, this paper examines the determinants of trade balance for Argentina over the last forty to fifty years. Our investigation confirms the existence of long-run relationships among trade balance, Real Exchange Rate (RER) and foreign and domestic incomes for Argentina during different real exchange rate management policies. Based on the estimations, the Marshall-Lerner condition is examined and, by means of impulse response functions, we trace the effect of a one-time shock to the RER on the trade balance checking the J-curve pattern. |
| Keywords: | Argentina; Marshall-Lerner; J-Curve; cointegration and impulse response analysis |
| JEL: | C22 F43 C32 F31 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:151&r=int |
| By: | González, Germán |
| Abstract: | This work provides a macroeconomic approach and a sound conceptual foundation for the notion of "competitiveness gains", so prone to multiple interpretations, and to make it fit for empirical analyses. Instead of "competitiveness" is "competitiveness gains" the relevant concept, defined as a situation where the economy experiences a higher growth rate of TFP than its competitors. We present a theoretical model of competitiveness that provides a rationale for the variations of competitiveness,associated to the behavior of related variables; then we carry out an empirical exercise which shows that our formalization supports a measurable approximation to competitiveness gains. |
| Keywords: | competitiveness; competitiveness gains measure; total factor productivity; trade and growth |
| JEL: | O47 F43 B41 O41 |
| Date: | 2006–10–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:143&r=int |
| By: | María Angélica Arbeláez Restrepo; Andrés Flórez; Natalia Salazar Ferro |
| Abstract: | This study presents an analysis of the financial services chapter of the Free Trade Agreement (FTA) between Colombia and the United States. It evaluates the negotiation process, its results, and its expected impacts on Colombia’s financial sector during the next few years. After Colombia’s unilateral financial liberalization in he early 90’s, the FTA is the more recent step towards greater openness of the domestic financial system. Even though the financial system is not expected to face any great changes, the agreement will have mplications in specific areas such as insurance and changes in the current operation of collective investment chemes, as well as broader indirect effects on foreign investment. The study concludes that with the FTA, the ountry took advantage of the opportunity to start an internal reform process aimed at financial sector modernization and its greater efficiency, in order to deepen financial consolidation in favor of a productive ector more open to foreign competition. |
| Date: | 2006–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:001018:002673&r=int |
| By: | Subhayu Bandyopadhyay (Department of Economics, West Virginia University, and IZA, Bonn); Howard J. Wall (Federal Reserve Bank of St . Louis) |
| Abstract: | With outsourcing comes a perceived tension between the competitive pressures faced by domestic firms and the effect that outsourcing has on domestic workers. To address this tension, we present a general-equilibrium model with an oligopolistic export sector and a competitive import-competing sector. When there is a minimum wage, an outsourcing tax switches jobs to unemployed natives. In this case, the policy is both politically popular and economically sound because it raises national income. This is possible because of the pre-existing distortion in the labor market caused by the minimum wage. The effect of an export subsidy is less clear. It may or may not be justified on welfare grounds. Also, increased international competition has no effect on the level of outsourcing, but the direction of its effect on unemployment and national income depends on the relative factor intensities of the two sectors. The paper is extended to consider the scenarios of wage flexibility and price competition. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:06-13&r=int |
| By: | Novy, Dennis (Department of Economics, University of Warwick) |
| Abstract: | The choice of invoicing currency for trade is crucial for the international transmission of macroeconomic policy. This paper develops a three-country model that endogenizes the choice of invoicing currency and that allows for a share of firms' costs to be denominated in foreign currency, consistent with the empirical evidence on the high degree of pass-through to import prices. Invoicing decisions are driven by firms' desire to hedge costs but also by exchange rate volatility and currency comovements. The model is tested empirically with a data set that spans ten currencies and 24 reporting countries, confirming the importance of currency comovements for the decision to invoice in vehicle currency. The findings also imply that if the U.S. share of world output continues to fall, other currencies will increasingly replace the U.S. dollar as an international vehicle currency. |
| Keywords: | Invoicing Currency ; Exchange Rate Risk ; Hedging |
| JEL: | F3 F4 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:765&r=int |
| By: | Yunus Aksoy (School of Economics, Mathematics & Statistics, Birkbeck); Hanno Lustig |
| Abstract: | We suggest a new dynamic partial equilibrium approach that features product differentiation and endogenizes market structure at the same time. The model yields clear-cut predictions regarding the effects of small and large exchange rate shocks on the market structure, pass-through and international trade. First, we account for the asymmetric price adjustment process with respect to exchange rate shocks. Secondly, we discuss an array of conditions where short and long-run international monetary neutrality is violated. We present in detail under which conditions imperfect competition is able to generate persistent and volatile real exchange rate deviations. Most predictions survive alternative market configurations. |
| JEL: | L16 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:0609&r=int |
| By: | Jonathan Munemo (World Bank); Subhayu Bandyopadhyay (Department of Economics, West Virginia University, and IZA, Bonn); Arabinda Basistha (Department of Economics, West Virginia University) |
| Abstract: | The effect of foreign aid on economic activity of a country can be dampened as it can potentially have adverse effects on exports through a real exchange rate appreciation. In this study we examine the long-term relationship between export performance and foreign aid in developing countries while accounting for other factors. The estimates do not show negative effect of foreign aid on exports. The estimated coefficients are mostly positive but insignificant. The result is robust to use of two different export performance measures and different sub-samples. |
| Keywords: | Foreign aid, export performance, developing countries |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:06-10&r=int |
| By: | Cole, Donald |
| Abstract: | "According to the International Labour Organization (ILO), the agricultural sector is one of the most hazardous to health worldwide. Agricultural work possesses several characteristics that are risky for health: exposure to the weather, close contact with animals and plants, extensive use of chemical and biological products, difficult working postures and lengthy hours, and use of hazardous agricultural tools and machinery. This brief outlines the occupational health hazards of agriculture, presents a case study on the trade-offs between their health and economic impacts, and proposes responses... To effect change, the agriculture and health sectors should work together more closely. The agricultural sector should develop and build on ways of working with farmers to grow crops that promote healthier cultivation practices and reduce exposure to hazards. Health-sector staff, meanwhile, should document health problems and identify the greatest hazards, help explain the health reasons for such changes, and monitor changes in health with improved production methods." From text |
| Keywords: | Agriculture, Diseases, Sustainability, Environmental management, Agricultural technology, Agriculture-health linkages, |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:2020br:13(8)&r=int |
| By: | Cristobal, Adolfo |
| Abstract: | This work presents a north-south endogenous-growth model that reproduces some recent EU stylized facts: convergence between countries, divergence between the same countries, more spatial concentration of economic activity and higher growth rates. We claim that the ongoing technological reduction of transaction costs can conceivably spur those phenomena, specially if a regional productive duality within the less-developed countries were reinforced by a biased incidence of that fall in transaction costs. A key element is Grossman and Helpman's complementarity between innovation and imitation. The channels that allow for higher growth-rates are migrations and scale-effects in the industrialized regions of the poorest countries. |
| JEL: | R11 F43 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:219&r=int |