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Effects of Trade Policy on Technology Adoption and Investment

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  • Teixeira, A.

Abstract

This paper studies the consequences of trade policy for the adoption of new technologies. It develops a dynamic international trade model with two sectors. Workers in manufacturing decide if new technologies are used, capital owners then choose investment. We analyze three different arrangements: free trade, tariffs, and quotas. In the model, free trade or low tariffs guarantee that the most productive technology available will be used. In contrast, under a quota or high tariffs the most productive technology available will not be used at all times. Further, in the latter case investment, capital-labor ratio and GDP per capita are smaller than in the former one.
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Suggested Citation

  • Teixeira, A., 2000. "Effects of Trade Policy on Technology Adoption and Investment," Insper Working Papers wpe_4, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    • Handle: RePEc:ibm:ibmecp:wpe_4
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    File URL: http://www.insper.edu.br/sites/default/files/2000_wpe013.pdf
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    References listed on IDEAS

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    1. Mokyr, Joel, 1992. "Technological Inertia in Economic History," The Journal of Economic History, Cambridge University Press, vol. 52(2), pages 325-338, June.
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    8. Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
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    Cited by:

    1. Herrendorf, Berthold & Teixeira, Arilton, 2002. "How Trade Policy Affects Technology Adoption and Productivity," CEPR Discussion Papers 3486, C.E.P.R. Discussion Papers.
    2. Berthold Herrendorf & Arilton Teixeira, 2005. "How Barriers to International Trade Affect TFP," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(4), pages 866-876, October.

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