Journal Article

Can trade really hurt? An empirical follow-up on Samuelson's controversial paper

Economic Inquiry, 50(3): 724-738

This paper investigates Samuelson's (JEP, 2004) argument that technical progress of the trade partner may hurt the home country. We illustrate this prospect in a simple Ricardian model for sitations with outward knowledge spillovers. Within this framework Samuelson's "Act II" effects may occur. Based on industry level panel data for seventeen OECD countries for the period 1973 to 2000 we show econometrically that the outflow of domestic knowledge via exports or FDI may have a negative impact on industry output in the home country. This is particularly so when exporting to technological less advanced countries and, more specifically, China.

Authors

Jürgen Bitzer
Philipp Schröder

Info

Publication Date
JEL Classification
F10, F11, F14, O30
DOI
10.1111/j.1465-7295.2010.00331.x