NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

What Do Rich Countries Trade with Each Other? R&D and the Composition of U.S. and Swedish Trade

Magnus Blomstrom, Robert E. Lipsey, Lennart Ohlsson

NBER Working Paper No. 3140 (Also Reprint No. r1551)
Issued in October 1989
NBER Program(s):ITI, IFM

A long tradition in international economics explains comparative advantage by differences between countries in their stage of development, or their endowments of land, labor, and capital, and suggests that universal development will reduce the importance of trade. Sweden and the United States possess similar factor endowments and have converged in overall productivity, but their bilateral trade has grown. The example of these two countries suggests that mutual technological progress may promote trade, with the new basis for specialization being the different technology levels or R&D intensities of the goods being traded, rather than the initial endowments.

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Document Object Identifier (DOI): 10.3386/w3140

Published: Banca Nazionale del Lavoro Quarterly Review, No. 173, pp. 215-235, (June 1990).

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