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How Trade Policy Affects Technology Adoption and Productivity

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  • Herrendorf, Berthold
  • Teixeira, Arilton

Abstract

How does trade policy a affect technology adoption, total factor productivity (TFP henceforth), and per capita income? To study this question we construct a dynamic general equilibrium model of a small open economy in which a coalition of skilled workers chooses the technology. We obtain three results. First, under free trade and under a tariff the best technology is used and TFP and per capita income are as large as is possible. Second, under a quota the best technology may or may not be used; in both cases per capita income and TFP are smaller than under free trade and a tariff. Third, average growth rates are the same across all three trade policy regimes but abandoning a quota leads to a short–term increase in growth rates.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3486.

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Date of creation: Aug 2002
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Handle: RePEc:cpr:ceprdp:3486

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Keywords: coalition; quota; tariff; technology adoption; total factor productivity;

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  2. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
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  19. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
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Cited by:
  1. Berthold Herrendorf & Arilton Teixeira, 2004. "Monopoly rights can reduce income big time," Econometric Society 2004 North American Winter Meetings 373, Econometric Society.
  2. Arilton Teixeira & Berthold Herrendorf, 2009. "Barriers to Entry and Development," Fucape Working Papers 22, Fucape Business School.
  3. Grabiella Berloffa & Maria Luigia Segnana, 2004. "Trade, inequality and pro-poor growth: Two perspectives, one message?," Department of Economics Working Papers 0408, Department of Economics, University of Trento, Italia.

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