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Factor Price Equality and Biased Technical Change in a Two-Cone Trade Model

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Author Info
Daniel Becker
Erich Gundlach

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Abstract

We reconsider the effects of long-run economic growth on relative factor prices across cones of specialization. We model economic growth as exogenous technical change. Allowing for capital biased technical change with a sector bias and for endogenous commodity prices, we find that economic growth may increase or decrease factor price differences across cones. For a neutral demand side and capital biased growth in the most capital intensive sector, we find that economic growth encourages less factor price diversity across cones. Copyright © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9361.2007.00421.x
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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Development Economics.

Volume (Year): 11 (2007)
Issue (Month): 4 (November)
Pages: 685-698
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Handle: RePEc:bla:rdevec:v:11:y:2007:i:4:p:685-698

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