NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Wake Up and Smell the Ginseng: The Rise of Incremental Innovation in Low-Wage Countries

Diego Puga, Daniel Trefler

NBER Working Paper No. 11571
Issued in August 2005
NBER Program(s):   ITI   PR

Increasingly, a small number of low-wage countries such as China and India are involved in innovation -- not `big ideas' innovation, but the constant incremental innovations needed to stay ahead in business. We provide some evidence of this new phenomenon and develop a model in which there is a transition from old-style product-cycle trade to trade involving incremental innovation in low-wage countries. We explain why levels of involvement in innovation vary across low-wage countries and even across firms within each low-wage country. We then draw out implications for the location of production, trade, capital flows, earnings and living standards.

download in pdf format
   (585 K)

email paper

This paper is available as PDF (585 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11571

Published: Puga, Diego & Trefler, Daniel, 2010. "Wake up and smell the ginseng: International trade and the rise of incremental innovation in low-wage countries," Journal of Development Economics, Elsevier, vol. 91(1), pages 64-76, January.

Users who downloaded this paper also downloaded these:
Puga and Trefler w9121 Knowledge Creation and Control in Organizations
Autor, Dorn, and Hanson w18054 The China Syndrome: Local Labor Market Effects of Import Competition in the United States
Foley and Kerr w17336 Ethnic Innovation and U.S. Multinational Firm Activity
Head, Ries, and Spencer w9162 Vertical Networks and US Auto Parts Exports: Is Japan Different?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us