Technology and Trade

We review the literature on the links between technology and international trade. The older literature assumed exogenous technologies and focused on their effects on the structure of foreign trade and on welfare. Recently much of the effort has been on explaining technological change. As a result, we also describe the effects of foreign trade on technological change. We deal with technological change that results from learning by doing and from innovation, and we describe the relationship between each one of these forms of change in technology with international trade. Apart from integrating much of the recent literature on learning by doing, we show that there are important common themes and results in these two strands of the literature.