Comparative Advantage and Long-Run Growth
We construct a dynamic, two-country model of trade and growth in which endogenous technological progress results from the profit-maximizing behavior of entrepreneurs. We study the role that the external trading environment and that trade and industrial policies play in the determination of long-run growth rates. We find that cross-country differences in efficiency at R&D versus manufacturing (i.e. comparative advantage) bear importantly on the growth effects of economic structure and commercial policies. Our analysis allows for both natural and acquired comparative advantage, and we discuss the primitive determinants of the latter.
|Date of creation:||Jan 1989|
|Date of revision:|
|Publication status:||published as The American Economic Review, Vol. 80, No. 4, pp. 796-815, (September 1990) .|
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