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Trapped factors and China’s impact on global growth

Bloom, Nick, Romer, Paul, Terry, Stephen and Van Reenen, John ORCID: 0000-0001-9153-2907 (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
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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: 20 Jun 2024 22:57

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