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.
Length: Date of creation: Mar 1983 Date of revision: Handle: RePEc:nbr:nberwo:1101
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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!]
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Lars E.O. Svensson, 1989.
"Trade in Risky Assets,"
NBER Working Papers
2403, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: