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Trade in Goods and Factors with International Differences in Technology

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Author Info
James R. Markusen
Lars E.O. Svensson

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Abstract

A general model of trade caused by international differences in production technology is developed using techniques of duality theory. For the caseof product-augmenting differences in technology, it is shown that there is a positive correlation between net export and technological superiority, such that a country will "on average" export goods for which the country has superior technolor. If some factors are permitted to be internationally traded, it is demonstrated via this correlation that the volume of trade must increase. Thus unlike trade caused by factor endowment differences, goods trade caused by product-augmenting differences in production technolody is always in this sense complementary with factor trade. For factor-augmenting technology differences, in the absence of factor trade the goods trade pattern is as if it was caused by factor endowment differences. With factor trade, goods trade and factor trade can then be either complements or substitutes.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1101.

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Date of creation: Mar 1983
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Handle: RePEc:nbr:nberwo:1101

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  1. Leonard Cheng, 1984. "International trade and technology: A brief survey of the recent literature," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 120(1), pages 165-189, March. [Downloadable!] (restricted)
  2. James R. Markusen & Lars E. O. Svensson, 1990. "Factor Endowments And Trade With Increasing Returns: Generalizations And Extentions," International Economic Journal, Korean International Economic Association, vol. 4(3), pages 1-21, October. [Downloadable!] (restricted)
  3. Jiandong Ju & Shang-Jin Wei, 2007. "Current Account Adjustment: Some New Theory and Evidence," NBER Working Papers 13388, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Katrin Springer, 2000. "Do We Have to Consider International Capital Mobility in Trade Models?," Kiel Working Papers 964, Kiel Institute for the World Economy. [Downloadable!]
  5. Nijkamp, P. & Poot, J., 1990. "Endogenous technological progress and spatial interdependence," Serie Research Memoranda 0061, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
  6. Linda S. Goldberg & Michael W. Klein, 1999. "International Trade and Factor Mobility: An Empirical Investigation," NBER Working Papers 7196, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Schiff, Maurice, 2006. "Substitution in Markusen's classic trade and factor movement complementarity models," Policy Research Working Paper Series 3974, The World Bank. [Downloadable!]
  8. James R. Markusen & Keith E. Maskus, 2001. "Multinational Firms: Reconciling Theory and Evidence," NBER Chapters, in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 71-98 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  9. Simona Rasciute & Eric J. Pentecost & Helena I. Marques, 2007. "An Empirical Investigation of the Determinants of the Location of Foreign Direct Investment in the Central and Eastern European Countries Using Multilevel Data," Discussion Paper Series 2007_22, Department of Economics, Loughborough University, revised Sep 2007. [Downloadable!]
  10. Lars E.O. Svensson, 1989. "Trade in Risky Assets," NBER Working Papers 2403, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Carol L. Osler, 1987. "Factor Prices and Welfare Under Integrated Capital Markets," NBER Working Papers 2447, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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