NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Product Development and International Trade

Gene M. Grossman, Elhanan Helpman

NBER Working Paper No. 2540 (Also Reprint No. r1458)
Issued in May 1988
NBER Program(s):   ITI   IFM

We develop a multi-country, dynamic general equilibrium model of product innovation and international trade to study the creation of comparative advantage through research and development and the evolution of world trade over tune. In our model, firms must incur resource costs to introduce new products and forward-looking potential producers conduct R&D and enter the product market whenever profit opportunities exist Trade has both intra- industry and inter-industry components, and the different incentives that face agents in different countries for investment and savings decisions give rise to Intertemporal trade. We derive results on the dynamics of trade patterns and trade volume, and on the temporal emergence of multinational corporations

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Document Object Identifier (DOI): 10.3386/w2540

Published: Journal of Political Economy, Vol. 97, No. 6, pp. 1261-1283, (December 1989). citation courtesy of

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