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Specialization Patterns and the Factor Bias of Technology

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  • Cuñat Alejandro

    ()
    (University of Essex, CEP, and CEPR)

  • Maffezzoli Marco

    ()
    (Università Commerciale “L. Bocconi” and IGIER)

Abstract

Development accounting exercises based on an aggregate production function find technology is biased in favor of a country's abundant production factors. We provide an explanation for this finding based on the Heckscher-Ohlin model. Countries trade and specialize in the industries that use intensively the production factors they are abundantly endowed with. For given factor endowment ratios, this implies smaller international differences in factor price ratios than under autarky. Thus, when measuring the factor bias of technology with the same aggregate production function for all countries, they appear to have an abundant-factor bias in their technologies.

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File URL: http://www.degruyter.com/view/j/bejm.2007.7.1/bejm.2007.7.1.1574/bejm.2007.7.1.1574.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 7 (2007)
Issue (Month): 1 (July)
Pages: 1-27

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Handle: RePEc:bpj:bejmac:v:7:y:2007:i:1:n:16

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  1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741 Elsevier.
  2. Alejandro Cunat & Marco Maffezzoli, 2003. "Can Comparative Advantage Explain the Growth of US Trade?," Working Papers 241, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  3. Francesco Caselli & Wilbur John Coleman II, 2006. "The World Technology Frontier," American Economic Review, American Economic Association, vol. 96(3), pages 499-522, June.
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