Absolute and Comparative Advantage, Reconsidered: The Pattern of International Trade with Optimal Saving
AbstractThis paper obtains new results about absolute and comparative advantage, by introducing international technological differences into the three-sector Findlay-Komiya and two-sector Oniki-Uzawa-Stiglitz models ofopen-economy growth with optimal saving. For example, ifa country has the same Hicks-neutral advantage in all industries, it exports the capital-intensive tradable, even though the technological advantage is only absolute rather than comparative. Alternatively, even a small comparative advantage for some good is sufficient for the advanced country to export this product, regardless of relative factor supplies. In either case, the fundamental reason for trade is technological superiority rather than factor abundance.
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Bibliographic InfoPaper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 00-02.
Date of creation: Oct 1999
Date of revision: Nov 2002
Publication status: Published: Revised version in Review of International Economics, Vol. 10, No. 4 (November 2002), pp. 645–656
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Other versions of this item:
- 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 645-56, November.
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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