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Consequences of imitation by poor countries on international wage inequalities and global growth

Kind, Hans Jarle
Working paper
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URI
http://hdl.handle.net/11250/166568
Date
2000-12
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  • Working papers (SNF) [809]
Abstract
This paper presents an endogenous growth model where the level of international transaction costs may be decisive for whether the poor East specializes in agriculture production, imitates goods from the rich West, or makes its own innovations. We show that the East produces only agricultural goods if transaction costs are high, while innovation is profitable when transaction costs are low. In between we have a range of transaction costs where the East imitates, possibly resulting in a lower global growth rate and a larger international wage gap than if imitation were not possible.
Publisher
SNF
Series
Working paper
2000:46

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