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Journal of Economic Integration 2024 June;39(2) :508-523.
DOI: https://doi.org/10.11130/jei.2024020
Trade Liberalization, International Relocation of Firms, and Economic Growth

Wataru Johdo 

Tokyo Keizai University, Tokyo, Japan
Corresponding Author: Wataru Johdo ,Email: johdo@tku.ac.jp
Copyright ©2024 Journal of Economic Integration
ABSTRACT
This paper presents a framework for understanding the role of global tariff rate reductions in affecting the world growth rate, given knowledge spillovers in research and development (R&D) and the relocation of firms. In particular, we highlight one aspect of the model: the international relocation of firms associated with a reduction in world tariff rates. This paper shows that, given the spillover effect of localized R&D knowledge, a simultaneous multilateral reduction in the common tariff rate increases the world growth rate through the relocation of firms.

JEL Classification
E20: General
F13: Trade Policy; International Trade Organizations
F16: Trade and Labor Market Interactions
F21: International Investment; Long Term Capital Movements
F43: Economic Growth of Open Economies
Keywords: tariffs | knowledge spillovers | R&D | international relocation of firms | endogenous growth
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