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Economic Growth With Trade In Factors Of Production

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  • KARINE YENOKYAN
  • JOHN J. SEATER
  • MARYAM ARABSHAHI

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

  • Karine Yenokyan & John J. Seater & Maryam Arabshahi, 2014. "Economic Growth With Trade In Factors Of Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(1), pages 223-254, February.
    • Handle: RePEc:wly:iecrev:v:55:y:2014:i:1:p:223-254
    DOI: 10.1111/iere.12047
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