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A North–South model of outsourcing and growth.
- Source :
- Review of Development Economics; Aug2018, Vol. 22 Issue 3, pe16-e35, 20p, 2 Graphs
- Publication Year :
- 2018
-
Abstract
- Abstract: In this paper, I formulate a simple North–South R&D‐based growth model where final goods firms in the North endogenously determine the range of international outsourcing of intermediate goods to the South. I show that a fall in the trade cost (through trade liberalization) of intermediate goods in the North: (i) reduces the wage of the North relative to that of the South; (ii) increases the outsourced variety of intermediate goods in the North; and (iii) stimulates Northern R&D activity and economic growth in both countries. By conducting welfare analysis, I also show that a decline in the trade cost of intermediate goods in the North improves welfare in the South more than in the North. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 13636669
- Volume :
- 22
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Review of Development Economics
- Publication Type :
- Academic Journal
- Accession number :
- 131480780
- Full Text :
- https://doi.org/10.1111/rode.12382