@techreport{NBERw11571,
 title = "Wake Up and Smell the Ginseng: The Rise of Incremental Innovation in Low-Wage Countries",
 author = "Diego Puga and Daniel Trefler",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "11571",
 year = "2005",
 month = "August",
 URL = "http://www.nber.org/papers/w11571",
 abstract = {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.},
}