THE CREATIVE RESPONSE AND INTERNATIONAL TRADE

In the standard Hecksher-Ohlin (HO) model, the specialization of countries is exogenous and static. This work elaborates the hypothesis that the specialization of countries is the endogenous outcome of the creative response of firms caught in out-of-equilibrium conditions by the changing conditions of factor and product markets. It presents three models. In the basic Schumpeter-Hecksher-Ohlin (SHO) model, countries try and react by means of the introduction of technological change to increase their productivity levels and to contrast the wage reducing effects of the factor cost equalization. The extended SHO models show how i) countries can react with the selective introduction in their specialized sector of activity of new technologies localized by the pervasive role of learning and ii) identify technological knowledge as the locally most abundant and idiosyncratic input so as to direct the introduction of knowledge intensive technological change.