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Dynamic Comparative Advantage and the Welfare Effects of Trade

This paper argues that developing economies may face a trade-off between specializaing according to existing comparative advantage (in low-technology goods), and entering sectors in which they currently lack a comparative advantage, but may acquire such an advantage in the future as a result of the potential for productivity growth (in high-technology goods). Comparative advantage is endogenously determined by past technological change, while simultaneously shaping current rates of innovation.

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Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 140.

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Length: 35 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:nuf:econwp:140
Contact details of provider: Web page: http://www.nuff.ox.ac.uk/economics/

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