Overview

The question of gain from the degree of economic openness, in both trade and investment, is challenged in this study. The computable general equilibrium (CGE) model named GTAP has been modified to address the question above under the non-Classical assumptions, which include technological improvement, scale economies, and imperfect competition. The North-South analysis has been adopted by assuming that the developed region is the leader in machinery improvement, while the rest of the world is the South. Moreover, the electronic equipment sector in industrialized developing countries is assumed to have economies of scale in the production process with the Cournot oligopolistic competition. Simulation exercises have been performed as scenario steps of movement toward globalization, which include the macroeconomic element changes (trade and investment liberalizations) and microeconomic element changes (technological improvement, scale economies, and imperfect competition). The evidence of simulation results help us explore and understand more about the international trade theories under the general equilibrium context and assumptions.