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Endogenous Comparative Advantage, Government, and the Pattern of Trade


  • Richard H. Clarida
  • Ronald Findlay


This paper explores the relationship between government policy and comparative advantage in a neoclassical model of international trade. A specification of the Ricardo-Viner model with public goods and public inputs is presented that is used to study the role that government policy can play in the determination and promotion of comparative advantage and in the maximization of the gains that may be obtained from international trade. The model is also used to study the influence that international trade can exert on the scale and scope of government activity. The paper endeavors to reconcile a positive theory of trade and government with the apparent shift in measured productivity that often follows an opening to trade. The paper concludes by interpreting the model in the context of recent policy discussions of such issues as structural impediments, competitiveness, and the role of trade policy.

Suggested Citation

  • Richard H. Clarida & Ronald Findlay, 1991. "Endogenous Comparative Advantage, Government, and the Pattern of Trade," NBER Working Papers 3813, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3813
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    References listed on IDEAS

    1. R. Manning & J. McMillan, 1979. "Public Intermediate Goods, Production Possibilities, and International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 12(2), pages 243-257, May.
    2. Michael Connolly, 1972. "Trade in Public Goods: A Diagrammatic Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 86(1), pages 61-78.
    3. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    4. Ishizawa, Suezo, 1988. "Increasing Returns, Public Inputs, and International Trade," American Economic Review, American Economic Association, vol. 78(4), pages 794-795, September.
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    1. repec:eee:inecon:v:109:y:2017:i:c:p:102-115 is not listed on IDEAS
    2. Pierre-Yves Hénin & Pierre Ralle, 1993. "Les nouvelles théories de la croissance : quelques apports pour la politique économique," Revue Économique, Programme National Persée, vol. 44(1), pages 75-100.
    3. Sergio Parrinello, 2002. "The 'institutional factor' in the theory of international trade: new vs. old trade theories," Chapters,in: Is There Progress in Economics?, chapter 15 Edward Elgar Publishing.
    4. Lorz, Jens Oliver, 1993. "Der Wettbewerb um international mobiles Kapital: Auswirkungen auf die nationale Finanzpolitik und die intertemporale Kapitalallokation," Kiel Working Papers 608, Kiel Institute for the World Economy (IfW).
    5. Ronald Findlay, 1995. "Infrastructure, Human Capital and International Trade," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(III), pages 289-301, September.

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