IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/3526.html
   My bibliography  Save this paper

Hysteresis in the Trade Pattern

Author

Listed:
  • Gene M. Grossman
  • Elhanan Helpman

Abstract

We study a world economy comprising two countries that may differ only in their prior experience in the research lab. Entrepreneurs in each country develop new technologies for varieties of a differentiated product whenever expected profits justify up-front research costs. Research productivity depends upon national stocks of knowledge capital, which accumulate in proportion to local research activity. The countries produce and trade their unique varieties of the differentiated good, as well as a homogeneous, "traditional" product. In this context, we ask whether a country can overcome a late start in research to develop a comparative advantage in the high-technology sector. We also examine the welfare properties of the equilibrium trajectory and of policies that might be used to reverse a country's fate.

Suggested Citation

  • Gene M. Grossman & Elhanan Helpman, 1990. "Hysteresis in the Trade Pattern," NBER Working Papers 3526, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3526
    Note: ITI IFM
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w3526.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Grossman, Gene M & Helpman, Elhanan, 1989. "Product Development and International Trade," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1261-1283, December.
    2. Raymond Vernon, 1970. "The Technology Factor in International Trade," NBER Books, National Bureau of Economic Research, Inc, number vern70-1.
    3. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
    4. Feenstra, Robert C., 1996. "Trade and uneven growth," Journal of Development Economics, Elsevier, vol. 49(1), pages 229-256, April.
    5. Ronald Jones, 1970. "The Role of Technology in the Theory of International Trade," NBER Chapters, in: The Technology Factor in International Trade, pages 73-94, National Bureau of Economic Research, Inc.
    6. Ethier, Wilfred J, 1982. "Decreasing Costs in International Trade and Frank Graham's Argument for Protection," Econometrica, Econometric Society, vol. 50(5), pages 1243-1268, September.
    7. Frank D. Graham, 1923. "Some Aspects of Protection Further Considered," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 37(2), pages 199-227.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rauch, James E., 1997. "Balanced and unbalanced growth," Journal of Development Economics, Elsevier, vol. 53(1), pages 41-66, June.
    2. Laura M. Werner, 2020. "Hysteresis losses in the Preisach framework," Empirical Economics, Springer, vol. 58(3), pages 1249-1278, March.
    3. Francis Green & David Ashton, 1992. "Skill Shortage and Skill Deficiency: A Critique," Work, Employment & Society, British Sociological Association, vol. 6(2), pages 287-301, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Helpman, Elhanan, 1989. "Monopolistic Competition in Trade Theory," Foerder Institute for Economic Research Working Papers 275470, Tel-Aviv University > Foerder Institute for Economic Research.
    2. Feenstra, Robert C., 1996. "Trade and uneven growth," Journal of Development Economics, Elsevier, vol. 49(1), pages 229-256, April.
    3. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 563-606.
    4. Rodriguez-Clare, Andres, 2007. "Clusters and comparative advantage: Implications for industrial policy," Journal of Development Economics, Elsevier, vol. 82(1), pages 43-57, January.
    5. Desdoigts, Alain & Jaramillo, Fernando, 2009. "Trade, demand spillovers, and industrialization: The emerging global middle class in perspective," Journal of International Economics, Elsevier, vol. 79(2), pages 248-258, November.
    6. Holger Breinlich & Elsa Leromain & Dennis Novy & Thomas Sampson, 2021. "Import liberalization as export destruction? Evidence from the United States," CEP Discussion Papers dp1779, Centre for Economic Performance, LSE.
    7. Vega-Redondo, Fernando, 1997. "Shaping long-run expectations in problems of coordination," European Journal of Political Economy, Elsevier, vol. 13(4), pages 783-806, December.
    8. Falvey, Rod, 1999. "Trade liberalization and factor price convergence," Journal of International Economics, Elsevier, vol. 49(1), pages 195-210, October.
    9. Andrea Brasili & Paolo Epifani & Rodolfo Helg, 1999. "On the dynamics of trade patterns," LIUC Papers in Economics 61, Cattaneo University (LIUC).
    10. Hartmut Egger & Simone Habermeyer, 2019. "Nonhomothetic preferences and rent sharing in an open economy," CESifo Working Paper Series 7522, CESifo.
    11. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    12. Paul Krugman, 1989. "History Vs. Expectations," NBER Working Papers 2971, National Bureau of Economic Research, Inc.
    13. Konstantin Kucheryavyy & Gary Lyn & Andrés Rodríguez-Clare, 2023. "Grounded by Gravity: A Well-Behaved Trade Model with Industry-Level Economies of Scale," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 372-412, April.
    14. Dominick Bartelme & Arnaud Costinot & Dave Donaldson & Andres Rodriguez-Clare, "undated". "The Textbook Case for Industrial Policy: Theory Meets Data," Working Papers 675, Research Seminar in International Economics, University of Michigan.
    15. Gene M. Grossman & Esteban Rossi-Hansberg, 2010. "External Economies and International Trade Redux," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 829-858.
    16. Chichilnisky, Graciela, 1996. "Trade regimes and Gatt: resource intensive vs. knowledge intensive growth, Chapter 10," MPRA Paper 8813, University Library of Munich, Germany.
    17. Ronald W. Jones, 1980. "Comparative and Absolute Advantage," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 116(III), pages 235-260, September.
    18. Paul R. Krugman, 1985. "Increasing Returns and the Theory of International Trade," NBER Working Papers 1752, National Bureau of Economic Research, Inc.
    19. Rodriguez-Clare, Andres, 1996. "The division of labor and economic development," Journal of Development Economics, Elsevier, vol. 49(1), pages 3-32, April.
    20. Albert Guangzhou Hu & Zhengning Liu, 2014. "Trade Liberalization and Firm Productivity: Evidence from Chinese Manufacturing Industries," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 488-512, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3526. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.