Economic growth with trade in factors of production

Karine Yenokyan, John J. Seater, Maryam Arabshahi

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5 Citations (Scopus)

Abstract

We study the world trading equilibrium in a Ricardian model, where factors of production are produced and traded. Even in the absence of technology transfer, international investment, research and development, and aggregate scale effects, trade affects economic growth through comparative advantage. Trade may raise the growth rate or leave it unchanged, depending on the patterns of comparative and absolute advantage. Trade in factors of production can effectively equalize technology even when technology transfer does not occur. Factor price equalization may hold, but the Stolper-Samuelson and Rybczynski theorems do not. The transition dynamics can be monotonic or oscillatory.

Original languageEnglish
Pages (from-to)223-254
Number of pages32
JournalInternational Economic Review
Volume55
Issue number1
DOIs
Publication statusPublished - Feb 1 2014

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ASJC Scopus subject areas

  • Economics and Econometrics

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