Solving Leontief's Paradox with Endogenous Growth Theory
|Title:||Solving Leontief's Paradox with Endogenous Growth Theory||Authors:||Sorg-Langhans, George; Struck, Clemens C.; Velic, Adnan||Permanent link:||http://hdl.handle.net/10197/10612||Date:||29-Nov-2018||Online since:||2019-05-22T12:25:55Z||Abstract:||Theories of international trade have severe difficulties in explaining why, despite i) substantial differences in factor-proportions across industries and ii) considerable cross-country differences in capital-labor ratios, the iii) the evidence for factor-proportions trade is rather weak. We propose a simple explanation of this well known finding: standard trade theories treat important forces such as the distribution of productivity within the economy as exogenous. We argue instead that the productivity allocation is endogenous and counter-balances factor-proportion differentials be- tween countries. Consequently, comparative advantage across countries of different development levels is negligible and this is why the incentives for trade are low.||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Start page:||1||End page:||26||Series/Report no.:||UCD Centre for Economic Research Working Paper Series; WP2018_19p||Copyright (published version):||2018 the Authors||Keywords:||Factor-proportions trade; Heckscher-Ohlin-Vanek; Macroeconomic general equilibrium models; Endogenous growth; Biased productivity||Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Working Papers & Policy Papers|
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