NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade in Capital Goods

Jonathan Eaton, Samuel Kortum

NBER Working Paper No. 8070
Issued in January 2001
NBER Program(s):   ITI

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 percent 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.

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Document Object Identifier (DOI): 10.3386/w8070

Published: Eaton, Jonathan and Samuel Kortum. "Trade In Capital Goods," European Economic Review, 2001, v45(7,Jun), 1195-1235.

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