Exogenous Technology Progress of a Large Developing Country and the Welfare of a Developed Country in an Open Economy

18 Pages Posted: 18 Mar 2009

See all articles by Yuqing Xing

Yuqing Xing

National Graduate Institute for Policy Studies

Xiaohui Zhang

University of Exeter Business School - Department of Economics

Date Written: March 15, 2009

Abstract

Using the standard Ricardian model, we developed the numerical result of Samuelson (2004) with general conditions. Specifically, our analysis shows that, the cumulative technological progress of the South will undermine the welfare of the North even before the relative productivities of the two are equalized. If the technological improvement does not reverse the initial pattern of comparative advantage, free trade is still better than autarky for the North. The negative welfare impact, however, depends on the relative size of the South. Generally the accumulation of the technological progress in a relative small southern country will not be able to lower the real income of the North, given that the latter maintains its original technological leadership.

Keywords: Comparative Advantage, Technological progress, Welfare

JEL Classification: F1

Suggested Citation

Xing, Yuqing and Zhang, Xiaohui, Exogenous Technology Progress of a Large Developing Country and the Welfare of a Developed Country in an Open Economy (March 15, 2009). Available at SSRN: https://ssrn.com/abstract=1360512 or http://dx.doi.org/10.2139/ssrn.1360512

Yuqing Xing (Contact Author)

National Graduate Institute for Policy Studies ( email )

Japan
81-3-6439-6141 (Phone)
81-3-6439-6010 (Fax)

Xiaohui Zhang

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom

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