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This Question is about International Trade Theory Consider a world with non-homothetic demand (ie income effects) and products that differ by skill-intensity of production. Assume
This Question is about International Trade Theory
Consider a world with non-homothetic demand (ie "income effects") and products that differ by skill-intensity of production. Assume that, across products, there is a positive correlation between the income elasticity of a product and the skill-intensity of producing that product. As China becomes wealthier and wealthier, is this goods news or bad news for countries that are close to China - such as Vietnam and Cambodia - that export low-skill intensive goods to China?
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