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Trade Liberalization and Technology Choice

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  • Rod Falvey
  • Geoff Reed

Abstract

This paper considers the links between trade liberalization and technology choice in the nonliberalizing country. Trade‐liberalization‐induced changes in relative product prices have direct effects on equilibrium relative factor returns. The consequent changes in relative input costs may also lead producers to switch to alternative technologies, which will in turn induce a further indirect change in relative factor returns. Will this indirect affect exacerbate or ameliorate the direct effect on relative factor returns? It is found that this depends on the relative cost savings across sectors and factor cost shares.

Suggested Citation

  • Rod Falvey & Geoff Reed, 2000. "Trade Liberalization and Technology Choice," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 409-419, August.
    • Handle: RePEc:bla:reviec:v:8:y:2000:i:3:p:409-419
    DOI: 10.1111/1467-9396.00231
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    Cited by:

    1. G. Badri Narayanan, 2006. "Effects of trade liberalization on firm profits and social welfare: the role of technology," Applied Economics Letters, Taylor & Francis Journals, vol. 13(1), pages 63-66.
    2. Ekholm, Karolina & Midelfart, Karen Helene, 2005. "Relative wages and trade-induced changes in technology," European Economic Review, Elsevier, vol. 49(6), pages 1637-1663, August.
    3. Foster-McGregor, Neil & Nomaler, Önder & Verspagen, Bart, 2021. "Job Automation Risk, Economic Structure and Trade: a European Perspective," Research Policy, Elsevier, vol. 50(7).

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