Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56580
Authors: 
Brandt, Jana
Meckl, Jürgen
Savin, Ivan
Year of Publication: 
2011
Series/Report no.: 
Joint discussion paper series in economics 18-2011
Abstract: 
We analyze the medium- and long-run effects of international integration of capital markets on specialization patterns of countries. For that purpose, we incorporate induced technical change into a Heckscher-Ohlin model with a continuum of final goods. This provides a comprehensive theory that explains the dynamics of comparative advantages based on differences in effective factor endowments. Our model constitutes an appropriate framework for understanding the changes in industrial structure of foreign trade observed, e.g., in the CEE countries over the last two decades. In addition, our approach provides a theoretical foundation for the empirical prospective comparative advantage index (Savin and Winker 2009) with new insights into the future dynamics of comparative advantages. Eventually, the model may serve as a basis to set development priorities in countries being in the period of transition.
Subjects: 
factor-biased technical change
continuum of goods
comparative advantage
factor mobility
innovation
knowledge spillovers
JEL: 
F15
F17
F21
F43
O33
Document Type: 
Working Paper

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