Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This paper analyses how increased R&D expenditures and market size influence the distribution of comparative advantage. Previous studies report ambiguous results and also refer to periods when markets where much more segmented and production factors less mobile. The empirical analysis comprise 19 OECD-countries and spans the period 1981 to 1999. It is shown how an increase in R&D-expenditures by one percentage point implies a three-percentage point increase in high-technology exports, whereas market size fails to attain significance. Also institutional factors influence the dynamics of comparative advantage

Keywords: Dynamic comparative advantage; R&D; market size; institutions

JEL-codes: F10; O30

31 pages, May 4, 2006

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Pontus Braunerhjelm and Per Thulin, (2008), 'Can Countries Create Comparative Advantages? R&D-expenditures, high-tech exports and country size in 19 OECD-countries, 1981-1999', International Economic Journal, pages 95-111

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