Directed Technical Change and International Trade
Article [Version of Record]
Is part ofCahier de recherche ; no. 2003-18.
Publisher(s)Université de Montréal. Département de sciences économiques.
- international trade
- comparative advantage
- induced innovation
- technological change
- [JEL:F1] International Economics - Trade
- [JEL:O3] Economic Development, Technological Change, and Growth - Technological Change; Research and Development
- [JEL:F1] Économie internationale - Commerce international
- [JEL:O3] Développement économique, changement technologique et croissance - Changement technologique
Recent changes in comparative advantage in the largest OECD economies differ significantly from the predictions of Heckscher-Ohlin-Vanek theory. Japan's rising share of OECD machinery exports and the improvement in the comparative advantage of the USA and Germany in heavy industry were accompanied by growing scarcities of the factors used intensively in the favored sector of each country. Here we examine Acemoglu's (1998, 2002) hypothesis that technical change may be directed toward raising the marginal productivity of abundant factors. Testing this hypothesis with 1970-1992 export data from 14 OECD countries, we find evidence that international comparative advantage was reshaped by innovation biased toward the abundant factors in the largest economies.