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Why Trade When You Can Transfer the Technology: Revisiting Smith and Ricardo

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  • Rajat Acharyya
  • Sugata Marjit

Abstract

This paper explores the possibility of international technology transfer in lieu of trade in a model with absolute and comparative advantage. Countries having absolute advantage in producing a good may offer that technology to a possible trading partner against a fee and both the countries might gain. Thus, gains from trade might be dominated by gains from technology transfer depending on the extent of comparative and absolute advantages. We provide detailed conditions under which free trade equilibrium will be pre-empted by technology transfer. Such an avenue of fruitful exchange remains unexplored in the Ricardian model of trade.

Suggested Citation

  • Rajat Acharyya & Sugata Marjit, 2021. "Why Trade When You Can Transfer the Technology: Revisiting Smith and Ricardo," CESifo Working Paper Series 9164, CESifo.
    • Handle: RePEc:ces:ceswps:_9164
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    References listed on IDEAS

    as
    1. Dominique Redor & Mohamed Saadi, 2011. "International technology transfer to developing countries: when is it immiserizing?," Revue d'économie politique, Dalloz, vol. 121(3), pages 409-433.
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    JEL classification:

    • F10 - International Economics - - Trade - - - General

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