Essays on technological progress and international trade

This dissertation consists of three essays. Chapter 1 begins with the presumption that the industrialization process is associated with non-linear dynamics of the growth rate. First, a multi-sector neoclassical growth model with exogenous technological progress is developed in order to generate non-linear growth patterns over time. The primary assumption of this model is the presence of asymmetric technological progress across different industries--higher but temporary technological progress in the labor-intensive industry, and lower but sustained technological progress in the capital-intensive industry. Second, it is shown that both closed economy and small open economy models may generate non-linear growth patterns but the small open economy model has better potential to generate this pattern. Third, the existence of non-linear time paths of growth rates is confirmed using cross-section data.; In Chapter 2, a simple three-factor, three-goods endogenous growth model with a Stone-Geary type utility function is presented to analyze the transitional dynamics of structural changes. It is shown that sectoral contributions of respective industries to economic growth are variable and different, and that structural changes in consumption and production take place in favor of the manufacturing industry against the agricultural industry during the transitional period. Theoretical results are calibrated, and compared with experiences of advanced countries in earlier periods. It is found that the simulation results are generally in accord with real economic data. In particular, the real interest rate and the ratio of investment to output are shown to be within reasonable ranges, which resolves the puzzles in neoclassical transitional dynamics raised by King and Rebelo (1993).; Chapter 3 presents a simple model in which a multinational corporation chooses the technology level of foreign direct investment in response to the host country's technological capability in a strategic way. It is shown that the technology level of foreign direct investment may be higher or lower but the probability of being imitated is always higher in a host country with a higher level of technological capability and a lower wage, or higher wage-adjusted technological capability. This suggests that technology spillovers due to the presence of foreign direct investment will be faster in countries with higher technological capability. It is also indicated that a higher imitation subsidy to domestic firms may lower the expected level of technology or welfare since foreign firms may choose substantially lower level of technology for a given subsidy.