Economic Growth with Trade in Factors of Production

32 Pages Posted: 25 Jan 2014

See all articles by Karine Yenokyan

Karine Yenokyan

Nazarbayev University

John J. Seater

Economics Dept., Boston College

Maryam Arabshahi

Independent

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Date Written: February 2014

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.

Suggested Citation

Yenokyan, Karine and Seater, John J. and Arabshahi, Maryam, Economic Growth with Trade in Factors of Production (February 2014). International Economic Review, Vol. 55, Issue 1, pp. 223-254, 2014, Available at SSRN: https://ssrn.com/abstract=2384233 or http://dx.doi.org/10.1111/iere.12047

Karine Yenokyan (Contact Author)

Nazarbayev University ( email )

53 Kabanbay Batyra Avenue
Astana, 010000
Kazakhstan

John J. Seater

Economics Dept., Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Maryam Arabshahi

Independent ( email )

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