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Factor-Biased Technical Change and Specialization Patterns

Author

Listed:
  • Jürgen Meckl

    (Justus Liebig University of Giessen)

  • Ivan Savin

    (Karlsruhe Institute of Technology, Germany
    Université de Strasbourg
    Ural Federal University, Russian Federation)

Abstract

We analyze the medium- and long-run effects caused by an inflow of capital into a labor-abundant country. For that purpose, we incorporate directed technical change into a Heckscher-Ohlin model with a continuum of goods. This provides a comprehensive theory explaining the dynamics of comparative advantage based on differences in effective factor endowments, i.e. factor endowments adjusted by differences in technological levels. Our model constitutes an appropriate framework for understanding, e.g., the empirically observed changes in industrial structures of Central and Eastern European countries. Furthermore, we provide a theoretical foundation for the empirical Prospective Comparative Advantage index with new insights into the futuredynamics of comparative advantage. Eventually, we show the importance of research spillovers and state dependence on the process of convergence.

Suggested Citation

  • Jürgen Meckl & Ivan Savin, 2018. "Factor-Biased Technical Change and Specialization Patterns," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 10(2), pages 75-100, June.
    • Handle: RePEc:psc:journl:v:10:y:2018:i:2:p:75-100
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    More about this item

    Keywords

    comparative advantage; technological progress; dynamic processes; innovation; factor-biased technical change;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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