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Technology adoption and factor proportions in open economies : theory and evidence from the global computer industry (English)

Theories of international trade assume that all countries use similar and exogenous technologies in the production of any good. This paper relaxes this assumption. The marriage of literatures on biased technical change and trade yields a tractable theory, which predicts that differences in factor endowments and intellectual property rights bias technical change toward particular factor intensities, and thus unit factor input requirements can vary across economies. Using data on net exports of a single industry, computers, intellectual property rights and factor endowments for 73 countries during 1980-2000, the paper shows that once technological choices are considered, countries with different factor endowments can become net exporters of the same product.

Details

  • Author

    Cusolito , Ana P. Lederman, Daniel

  • Document Date

    2009/09/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS5043

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2010/07/01

  • Disclosure Status

    Disclosed

  • Doc Name

    Technology adoption and factor proportions in open economies : theory and evidence from the global computer industry

  • Keywords

    factor endowment;marginal cost of production;identical technologies across countries;net export;intellectual property rights;factor of production;elasticity of substitution;pattern of specialization;pattern of trade;development research group;stock of capital;unit of output;structure of production;share in revenue;per capita income;production of output;data processing equipment;final goods producers;unit cost function;distribution of shares;impact of land;lack of control;effect of trade;list of countries;lending interest rate;capital per worker;total factor productivity;cost of capital;payment in kind;wages and salary;goodness of fit;economically active population;principal component analysis;production and export;labor ratio;technological regime;computer industry;technology choice;factor price;trading partner;technology adoption;comparative advantage;0 hypothesis;technology supplier;trade literature;destination country;explanatory variable;confidence interval;theoretical model;lending rate;technology selection;skilled labor;net exporter;baseline model;arable land;summary statistic;capital abundance;econometric result;comparative disadvantage;production function;competitive structure;capital stock;induced innovation;production technique;linear function;Technology Diffusion;patent right;manufacturing wage;research activities;factor supply;factor accumulation;international specialization;empirical analysis;empirical model;neoclassical model;Trade Yield;transport cost;factor share;statistical significance;research activity;commodity trade;cross-country differences;productivity differences;Labor Market;International Trade;trade pattern;capital share;labor share;endogenous technology;selection model;insurance scheme;estimation procedure;family allowance;housing allowance;industry wage;absolute advantage;cut-off point;commodity composition;regression model;cross national;product differentiation;scale economy;technology index;international technology;sample selection;panel data;part-time employment;world production;small sample;requirement use;econometric evidence;monopolistic competition;income share;tariff data;factor inputs;enforcement mechanism;measurement problem;industrial survey;labor income;cross-sectional data;technological change;price effect;national income;capital imports;patent agreement;sector output;constant elasticity;consumption effect;functional form;longer period;production side;composite index;manufacturing industry;employment data;constant term;weighted average;trading countries;econometric specification;bank lending;observed change;positive coefficient;empirical application;manufacturing sector;electrical machinery;world consumption;negative effect;trade balance;robustness check;market clearing;Economic Studies;economic study;monetary economics;import product;matrix notation;technological progress;substantial variation;aggregate economy;predictive power;increasing function;marginal product;neoclassical theory;entry condition;indicator function;domestic technology;cross-country variation;relative magnitude;institutional framework;trade specialization;econometric analysis;open economy;national lending;global market;econometric estimate;empirical result;wage data;

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Citation

Cusolito , Ana P. Lederman, Daniel

Technology adoption and factor proportions in open economies : theory and evidence from the global computer industry (English). Policy Research working paper ; no. WPS 5043 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/148461468162253981/Technology-adoption-and-factor-proportions-in-open-economies-theory-and-evidence-from-the-global-computer-industry