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Why Trade When You Can Transfer the Technology: Revisiting Smith and Ricardo

Author

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  • Rajat Acharyya
  • Sugata Marjit

Abstract

This paper explores the possibility of international technology transfer in lieu of trade in a model with absolute and comparative advantage. Countries having absolute advantage in producing a good may offer that technology to a possible trading partner against a fee and both the countries might gain. Thus, gains from trade might be dominated by gains from technology transfer depending on the extent of comparative and absolute advantages. We provide detailed conditions under which free trade equilibrium will be pre-empted by technology transfer. Such an avenue of fruitful exchange remains unexplored in the Ricardian model of trade.

Suggested Citation

  • Rajat Acharyya & Sugata Marjit, 2021. "Why Trade When You Can Transfer the Technology: Revisiting Smith and Ricardo," CESifo Working Paper Series 9164, CESifo.
    • Handle: RePEc:ces:ceswps:_9164
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    References listed on IDEAS

    as
    1. Glass, Amy Jocelyn & Saggi, Kamal, 1998. "International technology transfer and the technology gap," Journal of Development Economics, Elsevier, vol. 55(2), pages 369-398, April.
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    6. Iraklis KOLLIAS & Sugata MARJIT & Nickolas J. MICHELACAKIS, 2019. "Public Investment, Taxation And Transfer Of Technology," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(3), pages 441-456, September.
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    More about this item

    Keywords

    technology transfer; absolute advantage; comparative advantage; Smith; Ricardo;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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