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A Model of Technology Gap, Product Cycle, and the Process of Catching up Between the North and the South

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  • CHIEN‐FU CHOU
  • OZ SHY

Abstract

The paper presents a multi‐product two‐country overlapping generations model of trade and innovation. We show that for a low level of innovation (unitation) in the South, firms in the North innovate at a level which guarantees a long‐term technological gap between the North and the South. However, a high innovation level in the South leads to a situation where the South can catch up the North in a finite time. This model differs from the existing literature in two major aspects. a) Except for the head start of the North we assume that the North and the South are identical with respect to factor endowment and their ability to develop new goods. b) It is general enough to explain both the product cycle phenomena and the catching‐up process.

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  • Chien‐Fu Chou & Oz Shy, 1991. "A Model of Technology Gap, Product Cycle, and the Process of Catching up Between the North and the South," The Economic Record, The Economic Society of Australia, vol. 67(3), pages 217-226, September.
    • Handle: RePEc:bla:ecorec:v:67:y:1991:i:3:p:217-226
    DOI: 10.1111/j.1475-4932.1991.tb02548.x
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    References listed on IDEAS

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    1. Feenstra, Robert C & Judd, Kenneth L, 1982. "Tariffs, Technology Transfer, and Welfare," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1142-1165, December.
    2. Rauch, James E., 1986. "The transfer of production from rich to poor countries," Journal of Development Economics, Elsevier, vol. 23(1), pages 41-53, September.
    3. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    4. Dollar, David, 1986. "Technological Innovations, Capital Mobility, and the Product Cycle inNorth-South Trade," American Economic Review, American Economic Association, vol. 76(1), pages 177-190, March.
    5. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-266, April.
    6. Jensen, Richard & Thursby, Marie, 1986. "A strategic approach to the product life cycle," Journal of International Economics, Elsevier, vol. 21(3-4), pages 269-284, November.
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    Cited by:

    1. Natalia Tabatchnaia-Tamirisa, 1996. "Trade Liberalization and Industry Protection in Russia," Working Papers 199613, University of Hawaii at Manoa, Department of Economics.
    2. Arnold, Lutz G., 2003. "Growth in stages," Structural Change and Economic Dynamics, Elsevier, vol. 14(1), pages 55-74, March.
    3. Currie, David, et al, 1999. "Phases of Imitation and Innovation in a North-South Endogenous Growth Model," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 60-88, January.

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