crucially on property rights, which are an important institutional factor. A sec-
ond strand of literature is focused on market integration and convergence. Here,
Barro and Sala-i-Martin (1995) Hnd strong evidence of convergence among highly
integrated countries and regions (OECD countries, the US states, European regions
and Japanese prefectures) and Ben-David (1993) shows that the removal of trade
barriers fostered convergence across countries who joined the European Economic
Community. These results are not inconsistent with the model and the evidence
presented in this paper, because they show the pro-convergence effect of integration
between countries with similar property rights related regulations.
Before concluding, it is worthwhile to mention briefly some interesting empirical
observations. The model predicts that in a period of growing world trade the R&D
effort of advanced countries should become more specialized towards the sectors in
which those countries have a comparative advantage. In this respect, it is perhaps
suggestive to look at the evolution of the number of patents by technological category
issued in the US over the last four decades, reported by Hall et al. (2001): the
three traditional fields (Chemical, Mechanical and Others) have experienced a steady
decline, dropping from a share of 76% of total patents in 1965 to 51% only in 1990.
Conversely, Computers and Communications rose from 5% to over 20%, Drugs and
Medical form 2% to 10%, whereas Electrical and Electronics is the only stable field
(16-18% of total). Albeit consistent with the theory, this evidence is more difficult to
interpret, as it may reflect technology cycles or changes in demand. More in general,
the model generates something resembling a product cycles, where sectors become
less technology intensive after they move to the South. Distinguishing empirically
between this prediction and the traditional view, according to which goods become
less technology intensive before moving to LDCs, seem an interesting challenge for
future work.
4 Concluding Remarks
This paper has presented a simple model where market integration can amplify
income differences between rich and poor countries and lower the world growth rate,
even in the presence of standard mutual gains from trade. Rather than raising
warnings against globalization, the analysis has identified a specific market failure,
weak protection of intellectual property in developing countries, under which trade
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