The Global Welfare Impact of China: Trade Integration and Technological Change

69 Pages Posted: 16 Oct 2013

See all articles by Julian di Giovanni

Julian di Giovanni

Federal Reserve Banks - Federal Reserve Bank of New York; Universitat Pompeu Fabra - Department of Economics and Business; Barcelona Graduate School of Economics (Barcelona GSE); CREI and Universitat Pompeu Fabra; Centre for Economic Policy Research (CEPR)

Andrei A. Levchenko

University of Michigan - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jing Zhang

University of Michigan at Ann Arbor

Multiple version iconThere are 3 versions of this paper

Date Written: October 2013

Abstract

This paper evaluates the global welfare impact of China's trade integration and technological change in a multi-country quantitative Ricardian-Heckscher-Ohlin model. We simulate two alternative growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in which China's comparative disadvantage sectors catch up disproportionately faster to the world productivity frontier. Contrary to a well-known conjecture (Samuelson 2004), the large majority of countries experience significantly larger welfare gains when China's productivity growth is biased towards its comparative disadvantage sectors. This finding is driven by the inherently multilateral nature of world trade.

Keywords: China, International Trade, Productivity growth

JEL Classification: F11, F43, O33, O47

Suggested Citation

di Giovanni, Julian and Levchenko, Andrei A. and Zhang, Jing, The Global Welfare Impact of China: Trade Integration and Technological Change (October 2013). CEPR Discussion Paper No. DP9683, Available at SSRN: https://ssrn.com/abstract=2341046

Julian Di Giovanni (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

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Universitat Pompeu Fabra - Department of Economics and Business ( email )

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Barcelona Graduate School of Economics (Barcelona GSE) ( email )

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CREI and Universitat Pompeu Fabra ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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United Kingdom

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Andrei A. Levchenko

University of Michigan - Department of Economics ( email )

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Ann Arbor, MI 48109-1220
United States

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jing Zhang

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

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