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Putting industries into the idea‐flows model: A quantitative analysis

Author

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  • Liuchun Deng
  • Chi Zhang

Abstract

This paper studies the dynamic evolution of the patterns of Ricardian comparative advantage from the perspective of knowledge diffusion. The theoretical analysis builds knowledge diffusion into a quantifiable model of trade by allowing for industry‐level productivity to evolve through a spatial flow of ideas. This theoretical framework yields a law of motion of industry‐level productivity across countries, capturing strong interdependence in the evolution of Ricardian comparative advantage. We calibrate the model to 78 economies and 15 manufacturing industries, spanning from 1991 to 2017. Our quantitative framework captures strong convergence in industry‐level productivity and facilitates the identification of the key players that contribute most to global productivity growth. We use our model to draw a rich set of quantitative implications, including a welfare analysis of targeted restrictions of technology trade. Intégration des industries dans le modèle de flux des idées : une analyse quantitative. Le présent article étudie l'évolution dynamique des modèles d'avantage comparatif de Ricardo du point de vue de la diffusion des connaissances. L'analyse théorique intègre la diffusion des connaissances dans un modèle de commerce quantifiable en permettant à la productivité sectorielle d'évoluer par le biais d'un flux spatial d'idées. Ce cadre théorique produit une loi de mouvement de la productivité sectorielle entre les pays, qui reflète une forte interdépendance dans l'évolution de l'avantage comparatif de Ricardo. Nous calibrons le modèle sur 78 économies et 15 secteurs manufacturiers, de 1991 à 2017. Notre cadre quantitatif met en évidence une forte convergence de la productivité sectorielle et facilite la détermination des acteurs clés qui contribuent le plus à la croissance de la productivité mondiale. Nous utilisons notre modèle pour tirer un grand nombre de résultats quantitatifs, dont une analyse du bien‐être lié aux restrictions ciblées du commerce des technologies.

Suggested Citation

  • Liuchun Deng & Chi Zhang, 2025. "Putting industries into the idea‐flows model: A quantitative analysis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 58(3), pages 1179-1210, August.
    • Handle: RePEc:wly:canjec:v:58:y:2025:i:3:p:1179-1210
    DOI: 10.1111/caje.70018
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