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Directed Technical Change and International Trade

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  • DUDLEY, Leonard
  • MOENIUS, Johannes

Abstract

Recent changes in comparative advantage in the largest OECD economies differ significantly from the predictions of Heckscher-Ohlin-Vanek theory. Japan's rising share of OECD machinery exports and the improvement in the comparative advantage of the USA and Germany in heavy industry were accompanied by growing scarcities of the factors used intensively in the favored sector of each country. Here we examine Acemoglu's (1998, 2002) hypothesis that technical change may be directed toward raising the marginal productivity of abundant factors. Testing this hypothesis with 1970-1992 export data from 14 OECD countries, we find evidence that international comparative advantage was reshaped by innovation biased toward the abundant factors in the largest economies.

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Bibliographic Info

Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 2003-18.

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Length: 35 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:mtl:montde:2003-18

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Keywords: international trade; comrative advantage; induced innovation; technological change; dynamic;

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  1. Donald R. Davis & David E. Weinstein, 2001. "Do Factor Endowments Matter for North-North Trade?," NBER Working Papers 8516, National Bureau of Economic Research, Inc.
  2. Acemoglu, D., 1997. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," Working papers 97-14, Massachusetts Institute of Technology (MIT), Department of Economics.
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