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Contagion through Interactive Production and Dynamic Effects of Trade

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  • Xie, Xin

Abstract

This paper produces three main results in a two-country model where learning is generated through interactive production. First, it endogenizes the incidence of international spillovers and consequently, integrates the convergence and divergence literature of endogenous growth. Second, it qualifies the notion of "the advantage of backwardness" and shows that a large technology gap may reduce cross-country spillovers. Third, it points out that besides the already recognized "contagion effect," trade also promotes technological progress in the LDC through a "complementarity effect" that shifts the resources in the LDC toward the production of more sophisticated intermediate products. Copyright 1999 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Xie, Xin, 1999. "Contagion through Interactive Production and Dynamic Effects of Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 165-186, February.
    • Handle: RePEc:ier:iecrev:v:40:y:1999:i:1:p:165-86
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    Cited by:

    1. He, Yong, 2013. "Does China's trade expansion help African development? — an empirical estimation," China Economic Review, Elsevier, vol. 26(C), pages 28-38.
    2. Marion Dovis & Juliette Milgram‐Baleix, 2009. "Trade, Tariffs and Total Factor Productivity: The Case of Spanish Firms," The World Economy, Wiley Blackwell, vol. 32(4), pages 575-605, April.
    3. Yong He, 2011. "Does China's Trade Expansion Help African Development? - A South-South Trade Model Approach," CERDI Working papers halshs-00552190, HAL.

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