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Factor-Biased Technical Change and Specialization Patterns

Author

Listed:
  • Jana Brandt

    (University of Giessen)

  • Jürgen Meckl

    (University of Giessen)

  • Ivan Savin

    () (University of Giessen)

Abstract

We analyze the medium- and long-run effects of international integration of capital markets on specialization patterns of countries. For that purpose, we incorporate induced technical change into a Heckscher-Ohlin model with a continuum of final goods. This provides a comprehensive theory that explains the dynamics of comparative advantages based on differences in effective factor endowments. Our model constitutes an appropriate framework for understanding the changes in industrial structure of foreign trade observed, e.g., in the CEE countries over the last two decades. In addition, our approach provides a theoretical foundation for the empirical prospective comparative advantage index (Savin and Winker 2009) with new insights into the future dynamics of comparative advantages. Eventually, the model may serve as a basis to set development priorities in countries being in the period of transition.

Suggested Citation

  • Jana Brandt & Jürgen Meckl & Ivan Savin, 2011. "Factor-Biased Technical Change and Specialization Patterns," MAGKS Papers on Economics 201118, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:201118
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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/18-2011_savin.pdf
    File Function: First version, 2011
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    More about this item

    Keywords

    Factor-biased technical change; continuum of goods; comparative advantage; factor mobility; innovation; knowledge spillovers;

    JEL classification:

    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • 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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