Question

China in 2005: Implications for the Rest of the World," (Arndt, et al. 1997 Review thoroughly

Answer 1

ANSWER: The authors trace the sources of benefits and losses to individual welfare components with the usage a decomposition technique. The study revealed that China's growth adversely affected non-OECD countries, however most developing countries gained from China's growth. An economic slowdown in China leads to a welfare loss to the largest creditor regions, Japan and Western Europe, mainly due to lower return on capital. On contrary, due to the positive financial, allocative efficiency and non-capital effects on endowment large debtors, such as the United State and Latin America, enjoy gains in the welfare due to the low cost of capital