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CESifo Economic Studies Advance Access originally published online on October 23, 2008
CESifo Economic Studies 2008 54(4):551-562; doi:10.1093/cesifo/ifn028
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© The Author 2008. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

Technology and Income Distribution Issues in Trade Models

Ronald W. Jones*

* Department of Economics, University of Rochester, Rochester, NY 14627, USA, e-mail: rjones{at}mail.rochester.edu

In a world characterized by global competitive market conditions, technological improvements initially localized in one sector of one country cause real income changes at home and abroad, sometimes in paradoxical fashion. A foreign technological advance in the production of a commodity not produced at home may worsen the home country's real income. As well, a foreign technological advance in a commodity the home country exports may serve to raise home real incomes. These paradoxes are explained and related to the basic proposition that a country moving from autarky to free trade must gain. (JEL codes: F10, F11, O30)

Key Words: Turning points • technology transfers • large shocks


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