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Can Trade Really Hurt? An Empirical Follow-up on Samuelson’s Controversial Paper

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  • Jurgen Bitzer
  • Holger Görg
  • Philipp J.H. Schröder

Abstract

This paper investigates Samuelson's (JEP, 2004) argument that technical progress of the trade partner may hurt the home country. We illustrate this prospect in a simple Ricardian model for situations with outward knowledge spillovers. Within this framework Samuelson's Act II effects may occur. Based on industry level panel data for seventeen OECD countries for the period 1973 to 2000 we show econometrically that the outflow of domestic knowledge via exports or FDI may have a negative impact on industry output in the home country. This is particularly so when exporting to technologically less advanced countries and, more specifically, China..

Suggested Citation

  • Jurgen Bitzer & Holger Görg & Philipp J.H. Schröder, "undated". "Can Trade Really Hurt? An Empirical Follow-up on Samuelson’s Controversial Paper," Discussion Papers 08/34, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:08/34
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    Cited by:

    1. Julian di Giovanni & Andrei A. Levchenko & Jing Zhang, 2014. "The Global Welfare Impact of China: Trade Integration and Technological Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(3), pages 153-183, July.

    More about this item

    Keywords

    International R&D spillovers; export driven spillovers; outward foreign direct investment;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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