Factor Accumulation and Trade: Dynamic Comparative Advantage with Endogenous Physical and Human Capital
AbstractThis paper develops a two country endogenous growth model with accumulation of both physical and human capital. We establish the existence of two country balanced growth equilibria in which physical and human capital grow at the same rate in each country but physical/human capital ratios differ across countries. These balanced growth equilibria satisfy a static and dynamic version of the Heckscher-Ohlin theorem. We also show the existence of unbalanced growth equilibria in which the static and dynamic Hechscher-Ohlin theorems can be violated. The multiplicity of paths with international trade results from the intertemporal no arbitrage condition in cases where trade results in an equalization of factor prices across countries.
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Bibliographic InfoPaper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0031.
Date of creation: Oct 1996
Date of revision: Aug 2000
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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html
Trade patterns; factor accumulation; endogenous growth;
Other versions of this item:
- Eric W. Bond & Kathleen Trask & Ping Wang, 2003. "Factor Accumulation and Trade: Dynamic Comparative Advantage with Endogenous Physical and Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1041-1060, 08.
- D90 - Microeconomics - - Intertemporal Choice - - - General
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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