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The Effects of Technology Changes on Sectoral Trade Patterns

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  • Munehisa Kasuya
  • Toshihiro Okada

Abstract

We develop a model in which sectoral trade patterns depend on both the technology common to all sectors and the technologies specific to each sector. Changes in the common technology level affect sectoral trade patterns through their impact on intertemporal optimization behavior, while changes in the sector-specific technology levels affect sectoral trade patterns by influencing comparative advantage. The model shows: (1) unexpected increases in the common technology level worsen sectoral trade balances, but expected increases in the common technology level improve them; and (2) given other countries' sectoral technology levels, an increase in a sector-specific technology level relative to other sectors improves sectoral trade balances through its operation on comparative advantage. Using Japanese data, the empirical results reported in this paper support the model's predictions. Copyright © 2007 The Authors.

Suggested Citation

  • Munehisa Kasuya & Toshihiro Okada, 2007. "The Effects of Technology Changes on Sectoral Trade Patterns," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 112-125, February.
  • Handle: RePEc:bla:reviec:v:15:y:2007:i:1:p:112-125
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    References listed on IDEAS

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    Cited by:

    1. Hiroaki Sasaki, 2011. "Export of Deindustrialization and Anti-Balassa-Samuelson Effect: The Consequences of Productivity Growth Differential," Discussion papers e-10-015, Graduate School of Economics Project Center, Kyoto University.

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