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Sustained Comparative Advantage and Semi-Endogenous Growth

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  • Petsas, Iordanis
Abstract
This paper constructs a two-country (Home and Foreign) general equilibrium model of Schumpeterian growth without scale effects. The scale effects property is removed by introducing a distinct specification in the knowledge production function which generates semi-endogenous growth. In this model of semi-endogenous growth, an increase in the rate of population growth rate raises Home’s relative wage and lowers its range of goods exported to Foreign. An increase in the size of innovations increases Home’s relative wage but with an ambiguous effect on its comparative advantage. The model generates a unique steady-state equilibrium in which there is complete specialization in both goods and R&D production within each country.

Suggested Citation

  • Petsas, Iordanis, 2009. "Sustained Comparative Advantage and Semi-Endogenous Growth," MPRA Paper 14297, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14297
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    References listed on IDEAS

    as
    1. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
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    3. repec:bla:jecsur:v:16:y:2002:i:2:p:123-65 is not listed on IDEAS
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    9. Iordanis Petsas, 2010. "Sustained Comparative Advantage and Semi‐Endogenous Growth," Review of Development Economics, Wiley Blackwell, vol. 14(1), pages 34-47, February.
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    11. Peretto, Pietro F, 1998. "Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
    12. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    13. Taylor, M. Scott, 1993. "'Quality ladders' and Ricardian trade," Journal of International Economics, Elsevier, vol. 34(3-4), pages 225-243, May.
    14. Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
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    16. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    17. Michael Chui & Paul Levine & S. Mansoob Murshed & Joseph Pearlman, 2002. "North–South Models of Growth and Trade," Journal of Economic Surveys, Wiley Blackwell, vol. 16(2), pages 123-165, April.
    18. Elias Dinopoulos & Constantinos Syropoulos, 2004. "Globalization, Factor Endowments and Scale-Invariant Growth," DEGIT Conference Papers c009_009, DEGIT, Dynamics, Economic Growth, and International Trade.
    19. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, vol. 101(408), pages 1214-1229, September.
    20. Peter Howitt, 1999. "Steady Endogenous Growth with Population and R & D Inputs Growing," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 715-730, August.
    21. Dinopoulos, Elias & Thompson, Peter, 1998. "Schumpeterian Growth without Scale Effects," Journal of Economic Growth, Springer, vol. 3(4), pages 313-335, December.
    22. Petsas, Iordanis, 2008. "Sustained Comparative Advantage in a Model of Schumpeterian Growth without Scale Effects," MPRA Paper 14300, University Library of Munich, Germany, revised 30 Sep 2008.
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    Cited by:

    1. Petsas Iordanis, 2015. "General Purpose Technologies and their Implications for International Trade," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 47(1), pages 7-35, September.
    2. Iordanis Petsas, 2010. "Sustained Comparative Advantage and Semi‐Endogenous Growth," Review of Development Economics, Wiley Blackwell, vol. 14(1), pages 34-47, February.
    3. Mitchell H. Kellman & Yochanan Shachmurove, 2011. "Herfindahl-Hirschman Meets International Trade and Development Theories," Working Papers 50, Department of Applied Econometrics, Warsaw School of Economics.
    4. Teng, Faxin & Meier, Claudia & Kamenev, Dmitry & Klein, Martin, 2011. "Trade integration,restructuring and global imbalances --A tale of two countries," MPRA Paper 31946, University Library of Munich, Germany.
    5. Mitchell H. Kellman & Yochanan Shachmurove, 2010. "Adam Smith Meets an Index of Specialization in International Trade," PIER Working Paper Archive 10-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.

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    More about this item

    Keywords

    Comparative advantage; Trade; Schumpeterian growth; Scale effects; R&D races;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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