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Effects of Trade Policy on Technology Adoption and Investment

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  • Teixeira, Arilton

Abstract

This paper studies the consequences of trade policy for the adoption of new technologies. It develops a dynamic international trade model with two sectors. Workers in manufacturing decide if new technologies are used, capital owners then choose investment. We analyze three different arrangements: free trade, tariffs, and quotas. In the model, free trade or low tariffs guarantee that the most productive technology available will be used. In contrast, under a quota or high tariffs the most productive technology available will not be used at all times. Further, in the latter case investment, capital-labor ratio and GDP per capita are smaller than in the former one.

Suggested Citation

  • Teixeira, Arilton, 2003. "Effects of Trade Policy on Technology Adoption and Investment," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 23(1), May.
    • Handle: RePEc:sbe:breart:v:23:y:2003:i:1:a:2730
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    1. Thomas J. Holmes & James A. Schmitz, 1995. "Resistance to new technology and trade between areas," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 19(Win), pages 2-17.
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    Cited by:

    1. Berthold Herrendorf & Arilton Teixeira, 2005. "How Barriers to International Trade Affect TFP," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(4), pages 866-876, October.
    2. Herrendorf, Berthold & Teixeira, Arilton, 2002. "How Trade Policy Affects Technology Adoption and Productivity," CEPR Discussion Papers 3486, C.E.P.R. Discussion Papers.

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