We review the literature on the links between technology and international trade. The older literature assumed exogenous technologies and focused on their effects on the structure of foreign trade and on welfare. Recently much of the effort has been on explaining technological change. As a result, we also describe the effects of foreign trade on technological change. We deal with technological change that results from learning by doing and from innovation, and we describe the relationship between each one of these forms of change in technology with international trade. Apart from integrating much of the recent literature on learning by doing, we show that there are important common themes and results in these two strands of the literature.

The Impact of Growth and Technology on Trade in Nineteenth-Century British Thought

Technology and Trade

Publisher Summary This chapter discusses some aspects of technology and its impact on trade and economy It provides a unified and synthetic treatment of various models so that their common elements can be appreciated and their essential distinguishing features can be understood This chapter is divided into four sections The first one reviews the literature that takes technology as exogenous and examines the implications of productivity differences for trade patterns and the effects of technical change on outputs and welfare Sections 2 and 3 treat dynamic models in which the evolution of technology is endogenous In Section 2, technological progress is viewed as an accidental byproduct of production activities, while in Section 3 it results from deliberate investment The various sub-sections explore the implications of alternative assumptions about the form of industrial innovation and the nature of technological spillovers The last section presents a discussion of the effects of trade and industrial policies, of trade based on imitation in a setting of imperfectly-protected intellectual property rights, and of direct foreign investment and international licensing as vehicles for technology transfer

Chapter 25 Technology and trade

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The Convergence Debate Between David Hume and Josiah Tucker

On March 27, 1846, the House of Commons voted to repeal the Corn Laws by a vote of 327 to 229 (Thomas, 1929, p. 57). The repeal of the import duties on corn (meaning cereals, including wheat, oats, and barley) was one of the most significant economic events of the nineteenth century. This action has long interested economists because it represents one of the few apparently unambiguous examples of the influence of economic theory, specifically, the theory of comparative advantage, on economic policy. Free trade policies were enacted by Parliament “in the end due to the devoted efforts of a few men who dedicated themselves to spread the message” of the relationship between free trade and economic efficiency (Hayek, 1978, p. 128).

Ideology, Interest Groups, and the Repeal of the Corn Laws

Recent interest in convergence raises questions in the history of thought concerning the origins of the concern over convergence. We find that in the classical period, interest in convergence centred around the connection between the growth of neighbouring countries and one's own country. Convergence was often thought to be parasitic; countries grow at the expense of their neighbours. Writers taking this view advocated policies designed to seal their country from the negative effects of such growth. Writers making the opposite connection, i.e. growth is contagious, advocated open market policies and based their optimism on the limitless expansion of scientific knowledge. between the growth of neighbouring countries and one's own country. The concern over convergence in the classical period of economic thought was that convergence is often parasitic, that countries may grow at the expense of their neighbours. Writers taking such a view advocated policies that were meant to seal their country from the negative effects of such growth (e.g. restrictions on the export of machines). Writers making the opposite connection, i.e. that growth is contagious, advocated open-market policies in both goods and tech- nology. The single most important link connecting writers taking this latter view is their belief in the continuous development of new technologies arising from a limitless expansion of scientific knowledge.' Most writers from the time of the Scottish Enlightenment through the Classical period of economic thought directly connect advances in technology with increased labour productivity and increased wealth. Therefore, unless otherwise indicated, convergence in this paper is defined as a closing of the technology gap that exists between richer and poorer countries. Convergence also, necessarily, refers to convergence in wealth, and often in per capita income, particularly for the working class. At issue among writers in this per- iod is how the connection is made between convergence in technology and convergence in these other variables. Writers taking the parasitic view connec- ted technology convergence with an absolute loss in a real living standard measure such as per capita income. Thus, convergence in living standards occurred through an absolute immiserization of the leading country. In the contagious view, convergence in technology generated a convergence of living

The Impact of Growth and Technology on Trade in Nineteenth-Century British Thought

Citations

Technology and Trade

Chapter 25 Technology and trade

The Convergence Debate Between David Hume and Josiah Tucker

Ideology, Interest Groups, and the Repeal of the Corn Laws

Theories of Convergence and Growth in the Classical Period: The Role of Science, Technology and Trade