Sizing Up the Effects of Technological Decoupling

By Diego A. Cerdeiro, Rui Mano, Johannes Eugster, Dirk V Muir, Shanaka J Peiris

March 12, 2021

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Diego A. Cerdeiro, Rui Mano, Johannes Eugster, Dirk V Muir, and Shanaka J Peiris. Sizing Up the Effects of Technological Decoupling, (USA: International Monetary Fund, 2021) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper proposes channels through which technological decoupling can affect global growth, and embeds these different layers in a global dynamic macroeconomic model. Multiple scenarios are considered that differ along two dimensions: (i) the coalition of countries (hubs) that initiate the decoupling, and (ii) whether non-hub countries are also forced to decouple via ‘preferential attachment’ – i.e. by aligning themselves with the hub they trade most with. All global technology hubs lose across scenarios, and losses are largest under preferential attachment. Smaller countries with relations that straddle multiple hubs generally lose, whereas those whose trade is heavily concentrated with one hub may gain due to reduced competition under some scenarios. Technological fragmentation can lead to losses in the order of 5 percent of GDP for many economies.

Subject: Economic sectors, Exports, Financial crises, Financial sector policy and analysis, International trade, Labor productivity, Production, Productivity, Spillovers, Trade balance

Keywords: Asia and Pacific, China-United States, Exports, Global, High-tech goods trade, Innovation drive, Labor productivity, Non-tariff barriers, Non-tariff barriers., Productivity, R&D number, Sectoral trade elasticity, Spillovers, Technological decoupling, Trade, Trade balance, United States stop, World trade f low

Publication Details

Pages:

39
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/069
Stock No:

WPIEA2021069
ISBN:

9781513572673
ISSN:

1018-5941

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