Trade and technology adoption in distorted economies

Farid Farrokhi, Ahmad Lashkaripour and Heitor Pellegrina ()

Journal of International Economics, 2024, vol. 150, issue C

Abstract: This paper examines how labor market imperfections distort firm-level technology choices and alter the gains from trade in developing countries. Motivated by evidence that firms using modern technologies are disproportionately exposed to labor market distortions, we introduce firm-level technology choices and labor market distortions into an otherwise standard quantitative trade model. We then provide formulas for the welfare and labor productivity gains from trade liberalization, highlighting the role of distortions and technology choice. Our quantitative analysis reveals that labor market distortions provide a possible explanation for the inefficiently low levels of modern technology adoption in developing countries. Moreover, labor market distortions erode one-third of the potential labor productivity gains from trade liberalization among low-income countries.

Keywords: Trade; Technology Adoption; Labor Market Distortions; Developing Economies (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199624000461
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:150:y:2024:i:c:s0022199624000461

DOI: 10.1016/j.jinteco.2024.103922

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().