American Economic Journal: Macroeconomics: Vol. 6 No. 3 (July 2014)

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

Article Citation

di Giovanni, Julian, Andrei A. Levchenko, and Jing Zhang. 2014. "The Global Welfare Impact of China: Trade Integration and Technological Change." American Economic Journal: Macroeconomics, 6(3): 153-83.

DOI: 10.1257/mac.6.3.153

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 toward its comparative disadvantage sectors. This finding is driven by the inherently multilateral nature of world trade.

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Online Appendix (354.89 KB) | Download Data Set (4.36 MB) | Author Disclosure Statement(s) (156.63 KB)

Authors

di Giovanni, Julian (Pompeu Fabra U and Barcelona GSE)
Levchenko, Andrei A. (U MI)
Zhang, Jing (Federal Reserve Bank of Chicago)

JEL Classifications

F14: Empirical Studies of Trade
F43: Economic Growth of Open Economies
O19: International Linkages to Development; Role of International Organizations
O33: Technological Change: Choices and Consequences; Diffusion Processes
O47: Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
P24: Socialist Systems and Transitional Economies: National Income, Product, and Expenditure; Money; Inflation
P33: Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid

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