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Population, Technological Progress and the Welfare of the North-South Trade: A Revisit of the Classic Ricardian Model

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Listed:
  • Yuqing Xing

    (National Graduate Institute for Policy Studies, Tokyo, Japan)

  • Bo Zhang

    (School of Economics, Peking University, Beijing)

Abstract

This paper analyzes how the technology progress of the South country affects the welfare of the North country in a free trade world. Using the standard Ricardian model of the North-South trade, we show that, import biased technological progress of the South will undermine the welfare of the North, once the cumulative technological progress of the South exceeds a threshold. The relative population size of the South to North affects the threshold. Generally, a relatively larger South country has a lower threshold and the technological difference between the two countries remains even beyond the threshold. To a certain extent, the findings of the paper offer an theoretical explanation about the concerns of rising China in an integrated world economy.

Suggested Citation

  • Yuqing Xing & Bo Zhang, 2018. "Population, Technological Progress and the Welfare of the North-South Trade: A Revisit of the Classic Ricardian Model," GRIPS Discussion Papers 18-10, National Graduate Institute for Policy Studies.
    • Handle: RePEc:ngi:dpaper:18-10
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    References listed on IDEAS

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    1. Grossman, Gene M. & Helpman, Elhanan, 1995. "Technology and trade," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 25, pages 1279-1337, Elsevier.
    2. Alan V. Deardorff, 2007. "The Ricardian Model," Working Papers 564, Research Seminar in International Economics, University of Michigan.
    3. Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
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