Who leads and who lags? Technology Diffusion, E-commerce and Trade Facilitation in a model of Northern hub vis-?-vis Southern spokes

Abstract

In this paper, advanced economies are aggregated into ‘North’ whereas ‘South’ comprises the less advanced ones. Trade induced technology diffusion is source of enriched technological contents. We also consider two scenarios: (i—“hub and spokes [HAS]”) the North establishes separate bilateral FTAs with each South; and (ii—“FTASS”) Southern economies jointly establish a full-fledged FTA with North. Simulations confirm that: (i) North- South and South-South trade-led technology diffusion induces TFP-growth; (ii) relatively less developed South catches up; (iii) three regions experience welfare improvement; and (iv) ITenabled E-commerce facilitate trade. Public policies play role in catalyzing international competitiveness, innovativeness and absorption.