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Economic integration, product cycles and regime effects

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  • Liu, Ying
  • Wang, Zhe
  • Yin, Xiaopeng

Abstract

By adopting the modified north–south product cycle model of Grossman and Helpman (G&H, hereafter) (1991a) and adding “two-way” FDIs to form a complete economic integration, we obtain the opposite conclusion for such regime effects from that of both Krugman (1979) and G&H (1991b) in different frameworks, while G&H (1991a) have similar results in the same oligopolistic framework (without FDIs) we adopt. This demonstrates that the relative wage rate between the north and south will not be affected by the size of labor markets and that there are no regime effects on relative wage rate, regardless of their existing FDIs.

Suggested Citation

  • Liu, Ying & Wang, Zhe & Yin, Xiaopeng, 2016. "Economic integration, product cycles and regime effects," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 275-283.
    • Handle: RePEc:eee:reveco:v:43:y:2016:i:c:p:275-283
    DOI: 10.1016/j.iref.2016.02.015
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    Cited by:

    1. Adolfo Cristóbal Campoamor, 2019. "Gradual trade liberalization in a North–South model of the product cycle," Journal of Economics, Springer, vol. 127(3), pages 265-292, August.

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    More about this item

    Keywords

    Product cycle; Two-way FDI; Regime effect; Innovation; Labor market;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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