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Trapped factors and China’s impact on global growth

Bloom, Nick, Romer, Paul, Terry, Stephen and Van Reenen, John (2020) Trapped factors and China’s impact on global growth. Economic Journal. ISSN 0013-0133

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Identification Number: 10.1093/ej/ueaa086


After a recent increase in Chinese import competition, European firms increased innovation. We present and rationalise these patterns using “trapped factors” at the micro level within a stylised equilibrium model of product-cycle trade and growth. Trade integration of the magnitude observed between the OECD and low-wage nations as a whole can considerably increase the long-run growth rate and welfare. In the short-run exposed firms devote trapped factors to increased innovation, leading both to increased innovation at these individual firms as well as to a small amount of extra transitional growth overall. China accounts for half of the dynamic trade gains

Item Type: Article
Official URL:
Additional Information: © 2020 Royal Economic Society
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HG Finance
H Social Sciences > HF Commerce
JEL classification: C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C23 - Models with Panel Data
D - Microeconomics > D9 - Intertemporal Choice and Growth > D92 - Intertemporal Firm Choice and Growth, Investment, or Financing
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E22 - Capital; Investment (including Inventories); Capacity
Date Deposited: 05 Jun 2020 14:09
Last Modified: 10 Aug 2021 23:15

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