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Gains and losses from trade when countries differ in public knowledge stock

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Abstract

Following the insight from endogenous growth theory, this paper assumes that countries with advanced production structures have high levels of public knowledge. The purpose of this paper is to analyze whether a developing country should trade with countries that are more or less advanced than itself. It is argued that it is particularly harmful to trade with advanced countries if international transaction costs are high and capital is internationally immobile, in which case welfare may be higher in autarchy than with trade. For low levels of transaction costs, it may be more beneficial to trade with relatively advanced countries, particularly if capital is internationally mobile.

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Authors and Affiliations

  1. Norwegian Research Center in Organization and Management, Norway

    Hans Jarle Kind

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  1. Hans Jarle Kind
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Kind, H.J. Gains and losses from trade when countries differ in public knowledge stock. Atlantic Economic Journal 29, 274–293 (2001). https://doi.org/10.1007/BF02300549

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