Trapped Factors and China's Impact on Global Growth / Nicholas Bloom, Paul M. Romer, Stephen J. Terry, John Van Reenen.

Format:

Book

Author/Creator:

Bloom, Nicholas.

Contributor:

National Bureau of Economic Research.

Romer, Paul M.

Terry, Stephen J.

Van Reenen, John.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19951.

NBER working paper series no. w19951

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

In a general equilibrium product-cycle model, lower trade barriers increase Southern purchasing power, which lifts long-run growth by increasing the profit from innovation. In the short run, factors of production must be reallocated inside firms, which lowers the opportunity cost of innovation, generating an additional trapped factor effect. Starting from a baseline OECD growth rate of 2% we find that trade integration with low-wage countries in the decade around China's WTO accession could have increased long-run growth to 2.4%. There is an additional short-run trapped factors effect, raising growth to 2.7%. China accounts for about half of these growth increases.

Notes:

Print version record

March 2014.