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Comparative Advantage and Long-Run Growth

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Author Info
Gene M. Grossman
Elhanan Helpman

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Abstract

We construct a dynamic, two-country model of trade and growth in which endogenous technological progress results from the profit-maximizing behavior of entrepreneurs. We study the role that the external trading environment and that trade and industrial policies play in the determination of long-run growth rates. We find that cross-country differences in efficiency at R&D versus manufacturing (i.e. comparative advantage) bear importantly on the growth effects of economic structure and commercial policies. Our analysis allows for both natural and acquired comparative advantage, and we discuss the primitive determinants of the latter.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2809.

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Date of creation: Jan 1991
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Publication status: published as The American Economic Review, Vol. 80, No. 4, pp. 796-815, (September 1990) .
Handle: RePEc:nbr:nberwo:2809

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