The paper considers an extension of the Flam and Helpman model of North-South trade in which the government of South organizes and pays for R&D activity to reduce the production cost of quality-differentiated products. The main conclusions are the following: South has a welfare incentive to...

This paper studies the effects of labor supply on relative wages in a dynamic North-South model of trade. <link rid="b7">Lai (1995</link>)-a generalization of the <link rid="b3 b4">Grossman and Helpman (1991a,b</link>, ch. 11) models-showed that the relative wage of skilled (unskilled) labor in a region is positively (negatively) related to...