Specific Factors, Learning, and the Dynamics of Trade

Claustre Bajona

International Economic Review, 2004, vol. 45, issue 2, 499-521

Abstract: In the postwar period, the volume of trade among developed countries has increased at a much higher rate than GDP. This article presents a dynamic general equilibrium model of trade between developed countries that accounts for this pattern of trade dynamics. Countries trade in goods that use good-specific skilled labor and unskilled labor as factors of production. Specific skills are learned on the job and there exist positive effects in learning. Small initial differences in the distribution of experts in each country generate an increasing pattern of specialization over time. Knowledge spillovers across sectors are crucial determinants of the trade pattern. Copyright 2004 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Date: 2004
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