publication . Article . 1986

Technological Innovations, Capital Mobility, and the Product Cycle inNorth-South Trade.

Dollar, David;
Open Access
  • Published: 01 Jan 1986 Journal: American Economic Review, volume 76, issue 1 March, pages 177-90
This paper constructs a general equilibrium model of North-South tradein which the North continually introduces new goods. The rate at whichtechnology diffuses to the South is a function of differences in the cost of production in the two regions. The key result of the model is that labor force growth in the South initially increases real wages inthe North (a standard result in classical trade models), but in the long run reduces Northern wages by accelerating the transfer of technology and drawing capital out of the North as well. Copyright 1986 by American Economic Association.
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