Trade in capital goods

Jonathan Eaton, Samuel Kortum

Research output: Contribution to journalArticle

265 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 languageEnglish (US)
Pages (from-to)1195-1235
Number of pages41
JournalEuropean Economic Review
Volume45
Issue number7
DOIs
StatePublished - Jun 23 2001

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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