IDEAS home Printed from https://ideas.repec.org/a/gok/ijdcv1/v7y2017i2p119-137.html
   My bibliography  Save this article

Endogenous wealth and knowledge in Heckscher-Ohlin theory

Author

Listed:
  • Zhang, Wei-Bin

Abstract

This study introduces endogenous knowledge in the two-country free-trade model with endogenous capital recently proposed by Zhang (2015). We examine the role of knowledge utilization efficiencies, learning by doing efficiencies, total factor productivities, and preferences in influencing dynamics of capital stocks, knowledge, and pattern of trade on the basis of the generalized Heckscher-Ohlin (H-O) theory of international trade. The paper constructs a free trade model with wealth and knowledge accumulation as growth determinants. Labor and capital distributions between countries and between sectors are determined in perfectly competitive markets. The model is an integration of the Oniki-Uzawa trade model, the H-O model, the Solow-Uzawa neoclassical growth model, Arrow's learning-by-doing model, and Zhang's treatment of knowledge as international public stock. The model is simulated. The existence of equilibrium point is confirmed. The motion of the dynamic system is plotted. We carry out comparative dynamic analysis with regard to the knowledge utilization efficiencies, population expansion, the propensity to consume capital good, the propensity to consume countries' specified goods, and the propensity to hold wealth.

Suggested Citation

  • Zhang, Wei-Bin, 2017. "Endogenous wealth and knowledge in Heckscher-Ohlin theory," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 7(2), pages 119-137.
    • Handle: RePEc:gok:ijdcv1:v:7:y:2017:i:2:p:119-137
    as

    Download full text from publisher

    File URL: http://www.ijdc.org.in/uploads/1/7/5/7/17570463/dec_17_art4_v1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Bresnahan, Timothy F. & Trajtenberg, M., 1995. "General purpose technologies 'Engines of growth'?," Journal of Econometrics, Elsevier, vol. 65(1), pages 83-108, January.
    3. Claustre Bajona & Timothy Kehoe, 2010. "Trade, Growth, and Convergence in a Dynamic Heckscher-Ohlin Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 487-513, July.
    4. Hinloopen, Jeroen & Smrkolj, Grega & Wagener, Florian, 2013. "From mind to market: A global, dynamic analysis of R&D," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2729-2754.
    5. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    6. Richard A. Brecher & Zhiqi Chen & Ehsan U. Choudhri, 2002. "Absolute and Comparative Advantage, Reconsidered: The Pattern of International Trade with Optimal Saving," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 645-656, November.
    7. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    8. Zhang, Wei-Bin, 1993. "A woman's labor participation and economic growth : Creativity, knowledge utilization and family preference," Economics Letters, Elsevier, vol. 42(1), pages 105-110.
    9. Pierre-Richard Agénor, 2004. "Does globalization hurt the poor?," International Economics and Economic Policy, Springer, vol. 1(1), pages 21-51, March.
    10. H. Oniki & H. Uzawa, 1965. "Patterns of Trade and Investment in a Dynamic Model of International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(1), pages 15-37.
    11. Zhang Wei-Bin, 2015. "A Synthesis of the Heckscher-Ohlin and Oniki-Uzawa Trade Models with Heterogeneous Tastes, Different Technologies, and Endogenous Wealth," Scientific Annals of Economics and Business, Sciendo, vol. 62(3), pages 391-410, November.
    12. Stiglitz, Joseph E, 1970. "Factor Price Equalization in a Dynamic Economy," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 456-488, May-June.
    13. Zhang, Wei-Bin, 1992. "Trade and world economic growth : Differences in knowledge utilization and creativity," Economics Letters, Elsevier, vol. 39(2), pages 199-206, June.
    14. Brecher, Richard A & Chen, Zhiqi & Choudhri, Ehsan U, 2002. "Absolute and Comparative Advantage, Reconsidered: The Pattern of International Trade with Optimal Saving," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 645-656, November.
    15. Baxter, Marianne, 1992. "Fiscal Policy, Specialization, and Trade in the Two-Sector Model: The Return of Ricardo?," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 713-744, August.
    16. Ikeda, Shinsuke & Ono, Yoshiyasu, 1992. "Macroeconomic Dynamics in a Multi-country Economy: A Dynamic Optimization Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 629-644, August.
    17. Nocco, Antonella, 2005. "The rise and fall of regional inequalities with technological differences and knowledge spillovers," Regional Science and Urban Economics, Elsevier, vol. 35(5), pages 542-569, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang Wei-Bin, 2017. "A Multi-Country Trade and Tourism with Endogenous Capital and Knowledge," Business Systems Research, Sciendo, vol. 8(1), pages 71-91, March.
    2. Wei-Bin Zhang, 2018. "Growth, Research, and Free Trade with Knowledge as Global Public Capital," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 37-66.
    3. Wei-Bin Zhang, 2011. "Global Economic Growth, Elastic Labor Supply, Knowledge Utilization And Creation With Learning-By-Doing," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 58, pages 497-512, november.
    4. Wei-Bin ZHANG, 2016. "Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 103-126, Winter.
    5. Yoshiyasu Ono & Akihisa Shibata, 2006. "Capital Income Taxation and Specialization Patterns: Investment Tax vs. Saving Tax," ISER Discussion Paper 0649, Institute of Social and Economic Research, Osaka University.
    6. Partha Sen & Koji Shimomura, 2017. "Convergence and Overtaking in a Dynamic two Country Model," Open Economies Review, Springer, vol. 28(1), pages 107-124, February.
    7. Wei-Bin Zhang, 2014. "Capital and Knowledge: Integrating Arrow’s Learning-by-Doing, the Walrasian Equilibrium Theory and Neoclassical Growth Theory," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(2), pages 267-293, December.
    8. Wei-Bin ZHANG, 2016. "Tourism and economic structural change with endogenous wealth and human capital and elastic labor supply," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 103-126, Winter.
    9. Claustre Bajona & Timothy Kehoe, 2010. "Trade, Growth, and Convergence in a Dynamic Heckscher-Ohlin Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 487-513, July.
    10. Wei-Bin ZHANG, 2015. "Tourism, Trade And Wealth Accumulation With Endogenous Income And Wealth Distribution Among Countries," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 4(1), pages 1-1, January.
    11. Zhang Wei-Bin, 2020. "Economic Development and International and Interregional Tourism," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 13(4), pages 375-387, December.
    12. Wei-Bin Zhang, 2017. "Multi-Regional Growth, Agglomeration and Land Values in a Generalized Heckscher-Ohlin Trade Model," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 3(3), pages 270-305.
    13. Wei-Bin Zhang, 2015. "National Education and Global Economic Growth: A Synthesis of the Uzawa–Lucas Two-Sector and the Oniki–Uzawa Trade Models," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(4), pages 905-928, December.
    14. Yoshiyasu Ono & Akihisa Shibata, 2010. "Time Patience and Specialization Patterns in the Presence of Asset Trade," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(1), pages 93-112, February.
    15. Wei-Bin Zhang, 2020. "Global Development, Trade, Human Capital, And Business Cycles," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 5(special), pages 9-29, June.
    16. Wei-Bin Zhang, 2014. "National and International Inequalities in Income and Wealth in a Global Growth with Free Trade and National Inflation Policies," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(1), pages 22-40, May.
    17. Xiaobing Xing & Jiexiang Xu, 2014. "The saving rate and the upgrade of the trade commodity structure in developing countries: A dynamic H-O model under an oligopolistic market structure," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(8), pages 1145-1169, December.
    18. Zhang Wei-Bin, 2015. "A Synthesis of the Heckscher-Ohlin and Oniki-Uzawa Trade Models with Heterogeneous Tastes, Different Technologies, and Endogenous Wealth," Scientific Annals of Economics and Business, Sciendo, vol. 62(3), pages 391-410, November.
    19. Wei-Bin Zhang, 2017. "Business Cycles with Spirit of Capitalism and Conspicuous Consumption in a Multi-Country Growth Model," International Business Research, Canadian Center of Science and Education, vol. 10(8), pages 58-71, August.
    20. Wei-Bin Zhang, 2014. "Global Economic Growth and Environmental Change," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 64(3), pages 3-29, July-Sept.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gok:ijdcv1:v:7:y:2017:i:2:p:119-137. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/gipepin.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.