Trade and growth in a model of allocative inefficiency

2017 ◽  
Vol 17 (2) ◽  
Author(s):  
Richard Cothren ◽  
Ravi Radhakrishnan
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Productivity Growth ◽  
Reverse Causation ◽  
Resource Misallocation ◽  
Competitive Allocation ◽  
Trade And Growth ◽  
Allocative Inefficiency ◽  
Over Time ◽  
Volume Of Trade

AbstractThe empirical evidence on the causal relationship between international trade and economic growth is inconclusive. While some studies show that trade leads to growth, others have pointed to a reverse causation. In this paper, we develop a model of international trade and productivity growth in the presence of a misallocation of resources. Misallocation in a country arises as a result of lobbying by firms to establish barriers to the competitive allocation of labor. Misallocation prevents the country from exploiting its technological comparative advantage and leads to a reduction in the volume of trade in the absence of any explicit trade barriers. In the model, whether barriers diminish or worsen with productivity growth depends on the extent of the initial resource misallocation. If the initial resource misallocation is not severe, then productivity growth leads to diminishing barriers and vice versa. In either case, productivity growth strengthens the comparative advantage over time and therefore increases the volume of trade.

scholarly journals Ricardo and Haberler: an essay on the evolution of the economic thought based on the four magic numbers in the international trade theory

2021 ◽  
Vol 38 (77) ◽  
pp. 171-185
Author(s):  
Flavia Poinsot
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Labor Cost ◽  
Economic Thought ◽  
Magic Numbers ◽  
Trade Theory ◽  
International Trade Theory ◽  
New Research ◽  
Over Time

The Ricardian comparative advantage is one key cornerstone in the international trade theory. There is no shortage of textbooks supposing that Ricardo used solely labour as a factor of production. This approach originates with Haberler in the 1930s, who wrote that Ricardo’s theory of comparative advantage is robust, but not the labor-cost doctrine, which, Haberler assumed, Ricardo applied. This paper summarizes why Haberler’s perspective emerged, essaying an explanation of his way of interpreting Ricardo. To do this, we considered the new research on Ricardo, whose facets to be known seem to renew over time and never end.

scholarly journals Winners and Losers from China's Ascension in International Trade: a Structural Approach

2020 ◽  
Vol 39 (2) ◽  
pp. 185
Author(s):  
Joao Paulo Pessoa ◽  
Francisco Costa
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Productivity Growth ◽  
Raw Materials ◽  
Supply And Demand ◽  
Theoretical Framework ◽  
Structural Approach ◽  
Level Increase ◽  
Manufacturing Sectors ◽  
The World

<pre>This paper employs a unified theoretical framework to estimate the effect of changes within </pre><pre>China on the Brazilian and World's economy. </pre><pre>Based on the <span>Ricardian</span> model of trade of <span>Costinot</span> et al. (2012), we perform </pre><pre><span>counterfactuals</span> exercises to <span>analyze</span> how industries in Brazil would have performed </pre><pre>in the absence of the Chinese ascension. We discuss two main <span>counterfactual</span> exercises. </pre><pre>First, we model productivity growth in China as the main lever by which Chinese supply and demand conditions evolve and affect economies worldwide. </pre><pre>Second, we study how changes in composition of Chinese demand (taste) affects trade </pre><pre>flows around the world. The two <span>counterfactual</span> exercises together suggest that changes </pre><pre>in China's comparative advantage hampered manufacturing sectors abroad, in particular </pre><pre><span>labor</span>-intensive Brazilian manufacture producers. We find no support for the idea of a China </pre><pre>taste shock driving demand towards raw materials. Our model suggests that if China </pre><pre>triggered a commodity boom in the world, or at least in Brazil, this was driven mostly by </pre><pre>increased income in China. And any changes in China's tastes over products contributed to </pre><pre>moderate such boom. Specifically, our model indicates that the boom of <span>soybeans</span> </pre><pre>cultivation in Brazil is due to changes in Brazilian comparative advantage paired with </pre><pre>a level increase in demand for this product within China.</pre>

Trade and Spatial Growth

2017 ◽  
Vol 18 (1) ◽  
pp. 94-111
Author(s):  
Sirimal Abeyratne ◽  
N. S. Cooray
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Global Economy ◽  
Spatial Concentration ◽  
Trade Theory ◽  
Missing Link ◽  
Spatial Growth

Comparative advantage is based on ‘locational factors’ so that trade leads to growth and its spatial concentration. Until recently, the nexus between trade and spatial growth received little space within trade analyses though it did not appear to be a missing link in initial contributions to trade theory. The reshaping of the global economy with greater integration has called for analyses of trade and spatial growth. This article examines theoretical premises of the link between international trade and spatial growth, and the implications of reshaping of the global economy for the study of spatial growth within trade theory.

Corruption, Environmental Resources, and International Trade

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
Priya Ranjan ◽  
Baishali Bakshi
Keyword(s):  
International Trade ◽  
Resource Management ◽  
Comparative Advantage ◽  
Environmental Resources ◽  
Over Exploitation

Abstract It is shown how corruption in the management of environmental resources can give rise to a comparative advantage in environment-intensive industries. International trade, in this setting, is not necessarily welfare improving. When corruption responds endogenously to the over-exploitation of resources, it is possible for international trade to generate forces that improve resource management by reducing corruption. Therefore, in this case trade could provide gains in addition to the usual gains.

scholarly journals Export Competitiveness Analysis of Creative Industries in the European Union

2020 ◽  
Vol 17 (1) ◽  
pp. 28-37
Author(s):  
Deimantė Krisiukėnienė ◽  
Vaida Pilinkienė
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Theoretical Background ◽  
Creative Industries ◽  
Research Purpose ◽  
The European Union ◽  
Revealed Comparative Advantage ◽  
Data Set ◽  
Trade Competitiveness ◽  
The Eu

AbstractResearch purpose. The research purpose is to assess and compare the competitiveness of the EU creative industries’ export.Design/Methodology/Approach. The article is organised as follows: Section 1 presents a short theoretical conception of creative industries; Section 2 presents the theoretical background of trade competitiveness indices; Section 3 introduces the research data set, method and variables; Section 4 discusses the results of the revealed comparative advantage index analysis; and the final section presents the conclusions of the research. It should be noted that the research does not cover all possible factors underlying the differences in the external sector performance and thus may need to be complemented with country-specific analysis as warranted. Methods of the research include theoretical review and analysis, evaluation of comparative advantage indices and clustering.Findings. The analysis revealed that the EU countries may gain competitiveness because of the globalisation effects and the development of creative industries. The increase in the revealed comparative advantage (RCA) index during the period 2004–2017 shows rising EU international trade specialisation in creative industries. According to dynamic RCA index results, France, Poland, Slovakia, Slovenia and Spain has competitive advantage in creative industries sectors and could be specified as ‘rising stars’ according to dynamic of their export.Originality/Value/Practical implications. A creative industries analysis is becoming increasingly relevant in scientific research. Fast globalisation growth affects the processes in which closed economies together with their specific sectors are no longer competitive in the market because productivity of countries as well as particular economic sectors depends on international trade liberalisation, technology and innovation. Scientific literature, nevertheless, contains a gap in the area of international trade competitiveness research in creative industries sector.

Digital Economy and Knowledge Economics

2012 ◽  
pp. 1-14
Author(s):  
Bhekuzulu Khumalo
Keyword(s):  
Competitive Advantage ◽  
Comparative Advantage ◽  
Wave Theory ◽  
Paper Briefly ◽  
Michael Porter ◽  
True Meaning ◽  
Modern Economic ◽  
Economic Thinking ◽  
Over Time

The digitization of information has been one of the greatest stories of the last two decades. This paper seeks to explain the meaning of this process and how it affects already established models concerning trade and knowledge economics. This paper is based on the simple premise that knowledge is the most important resource, without which nothing can be done. The paper starts by looking at the competitive advantage theory that was largely promoted by Michael Porter whose works have greatly influenced the first part of this paper. The paper then discusses the ever more important role of knowledge due to competitive advantage theory and the digitalization of information. Finally the implications and discrediting the comparative advantage theory, this theory has no place in modern economic thinking. As we have more tools in our disposal, we must investigate the importance of wave theory as well as the true meaning of competition. It also looks into the greater role collaboration will play in the future. The paper briefly discusses the effects that the digitization of information will have over time.

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