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Technological Improvements and Comparative Advantage Reconsidered

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Author Info

  • Yochanan Shachmurove

    ()
    (The City College of The City University of New York and Department of Economics, the University of Pennsylvania)

  • Uriel Spiegel

    ()
    (Department of Economics, University of Pennsylvania and Department of Economics, Bar Ilan University)

Abstract

Given a world consisting of two countries, two commodities, and two consumers, this paper analyzes the potential effects of the current global trend of shifting world productions with regards to consumer goods. When technological improvements occur in a developing country, would terms of trade remain favorable for a developed country? Would both countries benefit? Instances where one or both countries benefit are feasible. However the developed country may lose as a result of an improvement in the production of the good that previously had been exported by the developed country.

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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 06-023.

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Length: 11 pages
Date of creation: 01 Sep 2006
Date of revision:
Handle: RePEc:pen:papers:06-023

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Keywords: International trade; Samuelson; autarky equilibrium; comparative advantage; endowment shock;

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  1. F. Gerard Adams & Byron Gangnes & Yochanan Shachmurove, 2004. "Why Is China So Competitive? Measuring and Explaining China’s Competitiveness," Working Papers 07-2004, Singapore Management University, School of Economics.
  2. Paul A. Samuelson, 2004. "Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 135-146, Summer.
  3. Johnson, G.E. & Stafford, F.P., 1993. "International Competition and Real Wages," Working Papers 323, Research Seminar in International Economics, University of Michigan.
  4. repec:fth:michin:323 is not listed on IDEAS
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