Special Issue in Memory of Michihiro Ohyama and Makoto Ikema
The Welfare Effect of Foreign Productivity and Quality Growth: A Quantitative Analysis
2020 Volume 23 Pages 235-261
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2020 Volume 23 Pages 235-261
Is the growth of emerging economies a benefit or a threat for the rest of the world? Ikema (1969, Oxfod Economic Papers) theoretically demonstrated that a country’s productivity growth normally benefits other countries. Ohyama (1998, Mita Journal of Economics; 2010, Keio Economic Studies) demonstrated that a country’s quality growth may hurt other countries if consumer preference exbihits home bias for quality. Using a multi-country, multi-industry Ricardian model of global value chains allowing quality home bias, this paper estimates the productivity growth and the quality growth of emerging economies during 1995-2007 and quantifies their welfare effects on Japan and other countries.
