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On Endogenous Product Cycles under Costly Trade

Cristobal Campoamor, Adolfo (2015): On Endogenous Product Cycles under Costly Trade.

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Abstract

The catchup and convergence of developing economies with the Western world is a major experience in modern history. In this paper we explore the role played jointly by technological imitation and trade liberalization in a North-South endogenous growth model. We prove that a gradual trade liberalization between South and North will promote convergence at any level of initial trade costs if the Southern economies are fully industrialized, their R&D potential is relatively low and the elasticity of substitution among manufactures is high enough.

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