Endogenous Imitation and Technology Absorption in a Model of North–South Trade

Abstract

This paper considers the transfer of technology from the North to the South that occurs through trade in high-technology goods and explicitly models the ‘reverse-engineering’ process that allows the South to assimilate new technologies. A key finding of this study is that the South's rate of growth is dictated by the size of the country's human capital, which determines its absorptive capacity and its ability to assimilate knowledge from the North. We find that while a Southern country that is poor in human capital can only imitate, Southern countries that possess sufficiently large human capital endowments, beyond a certain threshold, signal the onset of innovation. We also find that the North enjoys a higher rate of innovation and growth with trade than without. North's gains are the highest when it trades with a human-capital ‘poor’ South, because imitation increases South's demand for Northern intermediates. But trade with the Southern countries that are human capital rich (and therefore involved in innovation), dampens their demand for Northern imports, adversely affecting North's growth. The model predicts growth convergence between the North and a South that is well passed the threshold for innovation.     

Conditional factors Pushing catch-up across developed and emerging countries in the nanotechnology sector, 2000–2010

ABSTRACT

The aim of this article is to test national and sectorial technological and innovation capability factors, as well as social capability indicators, which could explain a possible conditional convergence across countries in nanotechnology within the context of a model of innovative technological knowledge β convergence. Based on growth convergence models, our proposal also takes into account the Schumpeterian theory, the National System Innovation –NSI– approach, and particularly the sectorial system of innovation and the technological catch-up hypothesis, as well as theoretical and empirical literature on conditional convergence. The findings allow us to confirm that new nanotechnology knowledge convergence is conditioned by a higher growth rate of technological capabilities in nanotechnology: growth from the initial level of patents granted, cumulative knowledge, and links to technological and scientific activities. Finally, as regards social capabilities, only the institutional weakness variable (corruption index) associates negatively with β convergence. As an emergent paradigm, we realize that convergence and catch-up are starting processes, which could allow less technologically developed countries to benefit from higher growth of some of the factors identified.     

Trade and Specialisation in Pollution Intensive Industries: North–South Evidence

Abstract

The pollution haven hypothesis (PHH) and the capital-labour hypothesis (KLH) state that the relative level of a country's environmental regulations and capital and labour endowments determines its comparative advantage respectively. Since these hypotheses lead to conflicting predictions as to whether the North or the South will specialise in pollution-intensive production, this paper examines whether changes in trade and specialisation patterns allow us to distinguish between pollution haven and factor endowment effects. We employ a methodology that enables us to present North-South trade patterns over time and to identify those periods when trade patterns were consistent with either the PHH and/or the KLH as a foundation for undertaking more detailed econometric studies.     

The hydroelectricity consumption and economic growth in Asian countries - evidence using an asymmetric cointegration approach

ABSTRACT

This study examines the four commonly tested hypotheses in hydroelectricity consumption – economic growth literature for 12 Asian countries. Our results from a recently developed hidden cointegration technique uncover rich and significant relationships between negative and positive components of the variables under consideration. In particular, we find evidence to support the neutrality hypothesis in five countries (Bangladesh, Indonesia, Pakistan, Philippines, and Thailand), the growth hypothesis in four countries (India, Japan, South Korea and Taiwan), and both growth and conservation hypotheses in three countries (China, Malaysia, and New Zealand). These findings suggest that appropriate economic policies should be elaborated on the basis of the country’s specific hydroelectricity consumption–growth nexus. Finally, our new evidence suggests that the lack of stable relationship between hydroelectricity consumption and economic growth documented in previous studies for some of these countries could be due to the failure to properly account for the nonlinearity property in the data.     

我国金融发展与地区经济收敛

本文研究了我国金融发展与地区经济差距之间的关系,研究认为:我国高度垄断的金融结构、政府对金融系统的不当管制与干预,以及"一元货币政策"和"二元金融制度"并存所引起的地区金融发展水平失衡等因素对地区间资本配置效率和资本形成能力的负面作用是引起我国地区差距的重要原因.并在新古典经济增长理论收敛假说的基础上,对1988～2002年我国地区间金融发展水平同经济增长率进行了实证检验,实证结果很好的支持了本文的理论假说.     

A tale of two countries: Directed technical change,trade and migratory movements

We propose a North-South model that reconciles trade and production strategies, flows of innovators and the path of economic divergence, or convergence, between countries. We explain the mechanisms behind these forces and show how the technological and economic gaps can be reversed if southern countries stop imitating northern goods and, instead, produce complementary goods. Such a strategy of complementarity on production yields the necessary incentives to innovators to engage in research in southern countries, which enhances the catching-up process between countries. It is also shown that migratory movements of unskilled labor between countries are also relevant to understand the dangers and benefits of different trade strategies for economic growth. This paper suggests a positive (negative) correlation between technological innovation in the North (South) and the level of substitutability in production, while under complementarity, technological innovation catches up in the South, therefore fostering the economic catching up process. A positive correlation between inflows of skilled and unskilled labor and substitutability of production between countries is also verified.     

The Smithian ontology of ‘relative poverty’: revisiting the debate between Amartya Sen and Peter Townsend*

ABSTRACT

Although ‘relative poverty’ is a phrase of immediate recognition, wide circulation and an ever increasing acceptance in the last half century, the concept itself remains surprisingly undertheorised. This paper wishes to try and remedy this discursive deficiency by proposing an ontological elucidation of the nature of our needs. The author re-visits the dispute between Amartya Sen and Peter Townsend — a duel of crossed wires (if not sabres), which can be seen as representative of the various theoretical takes on the nature of relative poverty. While the dispute itself ended with an unfortunate misunderstanding between the two scholars, whose different disciplinary affiliations have done nothing but replicate the rift, the author nonetheless foregrounds the commonality between the two thinkers – their respective identification with Adam Smith. By exploring points of differences and convergence with Adam Smith’s own ontology of needs, which the author reconstructed elsewhere, the paper hopes to offer insights into the ontology of ‘relative poverty’ as well as to suggest that taking this ontology seriously would lead us inevitably to a re-examination of ‘economic methodology’.     

Export-led Growth in South Asia: A Panel Cointegration Analysis

Abstract

In this paper, we attempt to examine the export-led and manufacturing export-led growth hypothesis for four South Asian Countries; namely, India, Pakistan, Bangladesh and Sri Lanka, using Pedroni’s panel cointegration technique for the period 1980–2002. In this context we estimate growth accounting equations to investigate the impact of exports, manufacturing exports and other important physical and human capital variables on both total GDP and non-export GDP. The study finds long-run equilibrium relationship between GDP (and non-export GDP) and exports along with other variables supporting export-led growth hypothesis. The results also substantiate the existence of manufacturing export-led growth hypothesis. Further, we find that export, fixed capital formation, public expenditure on health and education have statistically significant coefficients re-emphasizing the importance of these variables for higher economic growth.     

In Search of the Global East: Thinking between North and South

ABSTRACT

Carving up the world into Global North and Global South has become an established way of thinking about global difference since the end of the Cold War. This binary, however, erases what this paper calls the Global East – those countries and societies that occupy an interstitial position between North and South. This paper problematises the geopolitics of knowledge that has resulted in the exclusion of the Global East, not just from the Global North and South, but from notions of globality in general. It argues that we need to adopt a strategic essentialism to recover the Global East for scholarship. To that end, it traces the global relations of IKEA’s bevelled drinking glass to demonstrate the urgency of rethinking the Global East at the heart of global connections, rather than separate from them. Thinking of such a Global East as a liminal space complicates the notions of North and South towards more inclusive but also more uncertain theorising.     

A new impetus for endogenous growth: R&D offshoring via virtual labor mobility

We develop a simple North–South model of quality ladders to show that the virtual mobility of labor across time zones, facilitated by the advance in communication technology, can raise the endogenous growth rate of the world economy. The unique balanced growth rate is increasing in the endowments of skilled labor in both countries and decreasing in the rate of impatience. Moreover, we find that partial R&D offshoring to the South has initially a negative effect on the level of skilled wages in the North, but this is compensated for by its positive effect on the growth rate in both North and South.     

The new evidence to tendency of convergence in Solow model

This paper tests the hypothesis in the revised endogenous dynamic Solow model that there exists dynamic convergence to the moving steady-state as a single economy grows. The convergence in the revised endogenous dynamic Solow model implies that the real interest rate and the growth rate of income per capita in an economy would move together, i.e., they would be cointegrated in empirical terms. Taking the U.S. economy as our research subject, we test this hypothesis by investigating the cointegration between the U.S. real interest rate and its growth rate of income per capita during a fifty-year period from 1951 to 2000. Our results show that the U.S. real interest rate and its growth rate of income per capita move together over time, providing strong evidence to support the dynamic convergence hypothesis.     

Inflation and growth in South Africa

This paper studies the relationship between inflation and growthin South Africa. Two main issues are addressed: do tests ofthe South African data support the findings of cross-sectionstudies that inflation has a negative effect on growth overthe longer term? and, can higher growth be gained at the costof higher inflation in the short run? The findings are thatinflation drags down growth in South Africa over the longerterm, and that, in the short run, growth above its trend requiresaccelerating inflation. Thus, for growth to be pulled substantiallyabove its present low trend, inflation targeting in South Africawould have to be abandoned. However, this would be counterproductiveover the longer term, once the negative relationship betweeninflation and growth manifests itself.     

A structuralist North–South model on structural change,economic growth and catching-up

This paper presents a structuralist North–South model on structural change, industrialization and economic convergence. In a balance-of-payments-constrained macro-setting, we assume a cumulative process between industrialization and growth. Differently from the traditional post-Keynesian models, we endogenize the productive structure of developing countries. We enquire how industrialization affects uneven development and convergence processes. Multiple growth paths and a long-run path-dependent equilibrium emerge. Industrialization proves to be a necessary but not sufficient condition for catching-up. Good management by the domestic institutions of domestic industrialization is a complementary requirement.     

Balance-of-payment-constrained growth in unbalanced productive structures: disregarded terms of trade negative effects

Abstract:

The aim of this paper is to analyze the relation between foreign asset formation (FAF) and terms of trade (TOT) in countries characterized by unbalanced productive structures (UPS). This is done by modifying the structuralist thesis about the (overstated) positive effects of a rise in TOT on the balance-of-payment equilibrium gross domestic product growth rate. The theoretical analysis follows Thirlwall’s law and its subsequent modifications. The paper’s main contribution will be to explain and formalize the low—and even null—effects of TOT on balance-of-payment constraints due to the quasi-rent generated in the export sector of a UPS. To reinforce this idea, the empirical section econometrically shows the existence of a significant and positive relationship between TOT and FAF in developing countries.     

Two Dimensions of Convergence: National and International Wage Adjustment Effects of Cross-border Outsourcing in Europe

The paper proposes a distinction between the two dimensions of convergence—within and between countries—when analyzing the impact of cross‐border outsourcing on real wage rates in the EU‐15 and the CEEC. In the CEEC, international outsourcing has not affected the adjustment of average real wage rates at the manufacturing industry level, but it has led to a closure of the gap within a typical EU economy. Between‐country convergence is likewise fostered by cross‐border outsourcing, supporting the hypothesis that outsourcing facilitates international factor price equalization.     

南方国家知识产权保护与南北经济收敛

文章基于南北分析框架下的内生增长模型,分析了南方知识产权保护对同时进行自主创新和国外模仿的南方国家与进行创新的北方国家的经济收敛的影响,得出了与已有国际技术扩散模型不同的结论:当南方国家相对技术水平高于临界值时,加强南方知识产权保护可促进南北经济收敛;当南方相对技术水平低于临界值时,加强南方知识产权保护则降低南方经济增长率,不利于南北经济收敛;并且南方模仿能力的提高会改变知识产权保护对南北经济收敛的影响。     

Growth in stages

Existing North–South growth models generally ignore the possibility that the South becomes an innovating high-wage country. The present paper presents an analytically tractable North–South growth model in which the North innovates all the time, while the South is at first engaged in imitation and potentially starts to innovate too, later on. Three interesting results emerge from the analysis. First, a perfect foresight growth equilibrium may fail to exist. Second, there may be global indeterminacy in that both convergence to the steady state of the regime with imitation in the South and switching to the regime with innovation in the South represent perfect foresight equilibria. Third, technology policies in the South may have hysteresis effects: a temporary policy may lead the South permanently from imitation-driven to innovation-driven growth.     

Openness,growth convergence and China’s development prospects

ABSTRACT

This paper examines China’s long-term growth prospects and the potential drivers of future growth, based on cross-country productivity convergence and China’s featured demographic evolution. In a nonlinear open economy catch-up growth model, per capital GDP growth of the followers depend on that of the leading economy and time varying convergence of the relative per capita GDP. Comparable open economies of China are identified in terms of relative per capita GDP and the historical data of which are used to project China’s trajectory of productivity convergence and then the growth of per capita GDP. Projection shows China’s future GDP growth will gradually descend from 6.6–6.7% (2016–2020) to 2.6–2.7% (2046–2050) in low variant. Predictions under medium and high variants are provided as well. The importance of further opening-up domestic markets, elimination of birth control policies and accumulation of human capital in the process of promoting urbanization are highlighted and have significant implications for the economic restructuring and transformation of China.

Abbreviations: ICRG: International Country Risk Guide; IMF: International Monetary Fund     

Growth and convergence in South–South integration areas: An empirical analysis

Until recently, it has been argued in economic theory that regional integration and trade agreements among developing countries may achieve negative growth effects. This study tests empirically the effects of such South–South agreements on growth and convergence. All three world regions in question are considered: South America, Southeast Asia, and Sub‐Saharan Africa. A comprehensive panel data analysis is conducted that distinguishes between the problems of testing for stronger growth and accelerated convergence, respectively. The data indicate that the considered South–South agreements promote both.     

On wage- and profit-led demand regimes: learning from the evidence

Abstract

This paper contributes to the empirical research around the “wage-led” or “profit-led” demand regimes. It first reviews how Kalecki, and then Steindl, approached the relationship between economic growth and income distribution. Then, empirical analysis carried out under the probabilistic approach to econometric modeling shows statistical evidence, estimated through cointegration analysis, that in the long run, in three very open economies—Mexico, France, and Korea—the wage share is positively associated with demand and output. It finally discusses the macroeconomic dilemma that almost all countries have to face, i.e., a positive effect of a high-wage policy on demand and employment may diverge from a negative effect on output compatible with external equilibrium.