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Trade and endogenous product structures

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  • Satish Chand

Abstract

This paper presents a simple model that is able to account for three stylised facts about international trade. First, splicing of value-adding promotes trade in the abundant factor of an economy. Second, trade in intermediate inputs rises as costs of such trade fall but that free trade is not sufficient to eradicate unemployment of the abundant factor. Third, productivity growth is lower in labour-abundant economies than in the capital-abundant economies.

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File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC01-7.pdf
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Bibliographic Info

Paper provided by International and Development Economics in its series International and Development Economics Working Papers with number idec01-7.

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Length: 9 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:idc:wpaper:idec01-7

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  1. Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
  2. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
  3. Hanson, Gordon H, 1996. "Localization Economies, Vertical Organization, and Trade," American Economic Review, American Economic Association, vol. 86(5), pages 1266-78, December.
  4. Sanyal, Kalyan K & Jones, Ronald W, 1982. "The Theory of Trade in Middle Products," American Economic Review, American Economic Association, vol. 72(1), pages 16-31, March.
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