Does Trade and Technology Transmission Facilitate Inequality Convergence? An Inquiry into the Role of Technology in Reducing the Poverty of Nations
IMF Working Papers, January 1, 2007
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- Does Trade and Technology Transmission Facilitate Inequality Convergence? An Inquiry into the Role of Technology in Reducing the Poverty of Nations
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Bibliographic details
- Authors: Gouranga Gopal Das
- Published: January 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451865806.001
Summary and main findings
- Based on stylized evidence showing variation of the Gini coefficient of income inequality across skill cohorts and on the rapid rise in trade in technology-intensive goods, the ripple effects of technology transmission and income inequality are explored in a global Computable General Equilibrium (CGE) framework.
- An exogenous technology shock transmitted via trade from the United States induces productivity growth in developing regions.
- The technology spillover—captured aided by absorptive capability, better governance and institutions, technological symmetry and social acceptance—causes income to increase and income inequality to decline.
- The conjoined parameters retard growth's inequality-enhancing effect and thus facilitate long-run convergence of inequality between nations.
Methodology and analytical framework
- Analytical approach: global Computable General Equilibrium (CGE) framework.
- Key empirical anchors: variation of the Gini coefficient across skill cohorts; rapid rise in trade in technology-intensive goods.
- Shock studied: exogenous technology shock originating in the United States and transmitted via trade.
- Transmission and amplification factors examined: absorptive capability, governance and institutions, technological symmetry, social acceptance.
Policy implications and interpretation
- Technology transmission via trade can yield productivity gains in developing regions and reduce income inequality when accompanied by:
- strong absorptive capability;
- better governance and institutions;
- technological symmetry; and
- social acceptance.
- These factors jointly mitigate any inequality-enhancing effects of growth and support long-run inequality convergence across nations.
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