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- Title
CAN TRADE REALLY HURT? AN EMPIRICAL FOLLOW-UP ON SAMUELSON'S CONTROVERSIAL PAPER.
- Authors
BITZER, JÜRGEN; GÖRG, HOLGER; SCHRÖDER, PHILIPP J.H.
- Abstract
This paper investigates Samuelson's [Samuelson, P. A. 'Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization.' Journal of Economic Perspectives, 18(3), 2004, 135-46] argument that technical progress of the trade partner may hurt the home country. We illustrate this prospect in a simple Ricardian model for situations with outward knowledge spillovers. Within this framework Samuelson's Act II effects may occur. Based on industry level panel data for 17 OECD countries for the period 1973-2000 we show econometrically that the outflow of domestic knowledge via exports or foreign direct investment (FDI) to the rest of the world may have a negative impact on industry output in the home country. This is particularly so when exporting to technologically less advanced countries and, more specifically, China. ( JEL F10, F11, F14, O30)
- Subjects
OECD countries; INTERNATIONAL trade; COMMERCE; RICARDIAN Model of International Trade; EXTERNALITIES; ECONOMETRICS; FOREIGN investments; SAMUELSON, Paul A. (Paul Anthony), 1915-2009
- Publication
Economic Inquiry, 2012, Vol 50, Issue 3, p724
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/j.1465-7295.2010.00331.x