Trade in capital goods

Jonathan Eaton; Samuel Kortum

doi:10.1016/S0014-2921(00)00103-3

Trade in capital goods

Jonathan Eaton, Samuel Kortum

Economics

Research output: Contribution to journal › Article › peer-review

333 Scopus citations

Abstract

Innovative activity is highly concentrated in a handful of advanced countries. These same countries are also the major exporters of capital goods to the rest of the world. We develop a model of trade in capital goods to assess its role spreading the benefits of technological advances. Applying the model to data on production and bilateral trade in capital equipment, we estimate the barriers to trade in equipment. These estimates imply substantial differences in equipment prices across countries. We attribute about 25% of cross-country productivity differences to variation in the relative price of equipment, about half of which we ascribe to barriers to trade in equipment.

Original language	English (US)
Pages (from-to)	1195-1235
Number of pages	41
Journal	European Economic Review
Volume	45
Issue number	7
DOIs	https://doi.org/10.1016/S0014-2921(00)00103-3
State	Published - 2001

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

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10.1016/S0014-2921(00)00103-3

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title = "Trade in capital goods",

abstract = "Innovative activity is highly concentrated in a handful of advanced countries. These same countries are also the major exporters of capital goods to the rest of the world. We develop a model of trade in capital goods to assess its role spreading the benefits of technological advances. Applying the model to data on production and bilateral trade in capital equipment, we estimate the barriers to trade in equipment. These estimates imply substantial differences in equipment prices across countries. We attribute about 25% of cross-country productivity differences to variation in the relative price of equipment, about half of which we ascribe to barriers to trade in equipment.",

author = "Jonathan Eaton and Samuel Kortum",

note = "Funding Information: This paper was prepared for the International Seminar on Macroeconomics in Helsinki where we received useful suggestions from Harry Flam and Assaf Razin. We also received helpful comments at l{\textquoteright}{\'E}cole de Printemps at University of Aix-Marseille II, University of Munich, European Research Workshop in International Trade, Minnesota Workshop in Macroeconomic Theory, NBER Summer Institute, University of Toronto, University of Western Ontario, University of Montreal, Brown University, and Columbia University. We thank Kevin Lang for a helpful comment, Eli Berman for data on nonproduction workers, and Jian Zhang for excellent research assistance. We gratefully acknowledge the support of the National Science Foundation. ",

year = "2001",

doi = "10.1016/S0014-2921(00)00103-3",

language = "English (US)",

volume = "45",

pages = "1195--1235",

journal = "European Economic Review",

issn = "0014-2921",

publisher = "Elsevier B.V.",

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AU - Kortum, Samuel

N1 - Funding Information: This paper was prepared for the International Seminar on Macroeconomics in Helsinki where we received useful suggestions from Harry Flam and Assaf Razin. We also received helpful comments at l’École de Printemps at University of Aix-Marseille II, University of Munich, European Research Workshop in International Trade, Minnesota Workshop in Macroeconomic Theory, NBER Summer Institute, University of Toronto, University of Western Ontario, University of Montreal, Brown University, and Columbia University. We thank Kevin Lang for a helpful comment, Eli Berman for data on nonproduction workers, and Jian Zhang for excellent research assistance. We gratefully acknowledge the support of the National Science Foundation.

PY - 2001

Y1 - 2001

N2 - Innovative activity is highly concentrated in a handful of advanced countries. These same countries are also the major exporters of capital goods to the rest of the world. We develop a model of trade in capital goods to assess its role spreading the benefits of technological advances. Applying the model to data on production and bilateral trade in capital equipment, we estimate the barriers to trade in equipment. These estimates imply substantial differences in equipment prices across countries. We attribute about 25% of cross-country productivity differences to variation in the relative price of equipment, about half of which we ascribe to barriers to trade in equipment.

AB - Innovative activity is highly concentrated in a handful of advanced countries. These same countries are also the major exporters of capital goods to the rest of the world. We develop a model of trade in capital goods to assess its role spreading the benefits of technological advances. Applying the model to data on production and bilateral trade in capital equipment, we estimate the barriers to trade in equipment. These estimates imply substantial differences in equipment prices across countries. We attribute about 25% of cross-country productivity differences to variation in the relative price of equipment, about half of which we ascribe to barriers to trade in equipment.

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SP - 1195

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JO - European Economic Review

JF - European Economic Review

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ER -

Trade in capital goods

Abstract

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