Innovation and imitation in a model of North-South trade

► This paper analyzes the growth and welfare effects of opening to trade within a North-South framework. ► The model predicts intra-industry trade and specialization over different quality vintages. ► Opening to trade is beneficial for growth and welfare of both regions, but increases the North-South quality gap. ► Stronger IPR protection increases the gap and has a negative effect on the world growth and welfare.