/ / σ/σ σ/σ
θ θ θ θ
y 1 0.75 0.5 0.25 0 0 0.5 1 1.5 2 θ θ θ x
θ θ Φ θ Φ θ Φ
π θ /Φ γφ /θ σ θ π θ Φ
θ θ Φ θ θ θ θ σ θ
/ Φ θ θ / Φ / θ / θ
Normalized import share: (Xni / Xn) / (XII / XI) 1 0.1 0.01 0.001 Trade and geography 0.0001 100 1000 10000 Distance (in miles) between countries n and i 100000 Figure by MIT OCW. Adapted from Figure 1 on page 1752 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
TABLE II PRICE MEASURE STATISTICS Country Foreign Sources Foreign Destinations Minimum Maximum Minimum Maximum Australia (AL) NE (1.44) PO (2.25) BE (1.41) US (2.03) Austria (As) SW (1.39) NZ (2.16) UK (1.47) JP (1.97) Belgium (BE) GE (1.25) JP (2.02) GE (1.35) SW (1.77) Canada (CA) US (1.58) NZ (2.57) AS (1.57) US (2.14) Denmark (DK) FI (1.36) PO (2.21) NE (1.48) US (2.41) Finland (FI) SW (1.38) PO (2.61) DK (1.36) US (2.87) France (FR) GE (1.33) NZ (2.42) BE (1.40) JP (2.40) Germany (GE) BE (1.35) NZ (2.28) BE (1.25) US (2.22) Greece (GR) SP (1.61) NZ (2.71) NE (1.48) US (2.27) Italy (IT) FR (1.45) NZ (2.19) AS (1.46) JP (2.10) Japan (JP) BE (1.62) PO (3.25) AL (1.72) US (3.08) Netherlands (NE) GE (1.30) NZ (2.17) DK (1.39) NZ (2.01) New Zealand (NZ) CA (1.60) PO (2.08) AL (1.64) GR (2.71) Norway (NO) FI (1.45) JP (2.84) SW (1.36) US (2.31) Portugal (PO) BE (1.49) JP (2.56) SP (1.59) JP (3.25) Spain (SP) BE (1.39) JP (2.47) NO (1.51) JP (3.05) Sweden (SW) NO (1.36) US (2.70) FI (1.38) US (2.01) United Kingdom (UK) NE (1.46) JP (2.37) FR (1.52) NZ (2.04) United States (US) FR (1.57) JP (3.08) CA (1.58) SW (2.70) Notes: The price measure D ni is defined in equation (13). For destination country n, the minimum Foreign Source is min i n exp D ni. For source country i, the minimum Foreign Destination is min n i exp D ni. Table by MIT OCW. Adapted from Table II on page 1754 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
Log of normalized import share: ln(xnl / Xn) - (XII / XI) 0-2 -4-6 -8-10 -12 0 0.2 0.4 Trade and prices 0.6 0.8 1 1.2 1.4 Price measure: Dni Figure by MIT OCW. Adapted from Figure 2 on page 1755 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
β β β β π β π β α α α ω
ω π β αβ ω π β αβ αβ
/θβ γ /β /θβ θβ/θβ /θβ θβ/θβ γ /β /θβ
π θβ θβ π θ /θβ / /θβ / θ β θ β/β /
β θ θ β θ θ
TABLE VI STATES OF TECHNOLOGY Country Estimated Implied States of Technology Source-country Competitiveness θ = 8.28 θ = 3.60 θ = 12.86 Australia 0.19 0.27 0.36 0.20 Austria -1.16 0.26 0.30 0.23 Belgium -3.34 0.24 0.22 0.26 Canada 0.41 0.46 0.47 0.46 Denmark -1.75 0.35 0.32 0.38 Finland -0.52 0.45 0.41 0.50 France 1.28 0.64 0.60 0.69 Germany 2.35 0.81 0.75 0.86 Greece -2.81 0.07 0.14 0.04 Italy 1.78 0.50 0.57 0.45 Japan 4.20 0.89 0.97 0.81 Netherlands -2.19 0.30 0.28 0.32 New Zealand -1.20 0.12 0.22 0.07 Norway -1.35 0.43 0.37 0.50 Portugal -1.57 0.04 0.13 0.01 Spain 0.30 0.21 0.33 0.14 Sweden 0.01 0.51 0.47 0.57 United Kingdom 1.37 0.49 0.53 0.44 United States 3.98 1.00 1.00 1.00 Notes: The estimates of source-country competitiveness are the same as those shown in Table III. For an estimated parameter S i, the implied state of technology is T i = (e S iw i) θ β. States of technology are normalized relative to the U.S. value. Table by MIT OCW. Adapted from Table VI on page 1765 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
TABLE VII GEOGRAPHIC BARRIERS Source of Barrier Estimated Geography Parameters Implied Barrier's % Effect on Cost θ = 8.28 θ = 3.60 θ = 12.86 Distance [0, 375) Distance [375, 750) Distance [750, 1500) Distance [1500, 3000) Distance [3000, 6000) Distance [6000, maximum] Shared border Shared language European Community EFTA -3.10-3.66-4.03-4.22-6.06-6.56 0.30 0.51 0.04 0.54 Destination country: Australia 0.24 Austria -1.68 Belgium 1.12 Canada 0.69 Denmark -0.51 Finland -1.33 France 0.22 Germany 1.00 Greece -2.36 Italy 0.07 Japan 1.59 Netherlands 1.00 New Zealand 0.07 Norway -1.00 Portugal -1.21 Spain -1.16 Sweden -0.02 United Kingdom 0.81 United States 2.46 45.39 55.67 136.51 176.74 27.25 32.97 62.77 66.44 108.02 120.82-3.51-5.99-0.44-6.28 206.65 222.75 439.04 518.43-7.89-13.25-1.02-13.85 36.85 38.82 60.25 66.54-2.27-3.90-0.29-4.09-2.81-6.35 22.46-12.65-7.99 6.33 17.49-2.61-11.39 32.93-0.86-17.43-11.42-0.80 12.85 15.69 14.98 0.30-9.36-25.70 59.37-1.82 13.94-26.74-8.34-17.42-5.22 15.15 4.03 44.88 10.94-5.90-1.69-24.27-7.49 92.45 20.11-1.97-0.56 35.62-11.60-24.33-7.51-1.83-0.52 32.06 8.10 39.82 9.84 37.85 9.40 0.69 0.19-20.23-6.13-49.49-17.40 Notes: The estimated parameters governing geographic barriers are the same as those shown in Table III. For an estimated parameter d, the implied percentage effect on cost is 100(e -d/θ -1). Table by MIT OCW. Adapted from Table VII on page 1766 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
TABLE VIII SUMMARY OF PARAMETERS Parameter θ α β T i d ni Definition Value comparative advantage 8.28 (3.60, 12.86) manufacturing share 0.13 labor share in costs 0.21 states of technology Table VI geographic barriers Table VII Source Section 3 (Section 5.2, section 5.3) production and trade data wage costs in gross output source effects stripped of wages geographic proxies adjusted for θ Table by MIT OCW. Adapted from Table VIII on page 1767 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
TABLE IX THE GAINS FROM TRADE: RAISING GEOGRAPHIC BARRIERS Country Welfare Percentage Change from Baseline to Autarky Mobile Labor Immobile Labor Mfg.Prices Mfg. labor Welfare Mfg.Prices Mfg. Wages Australia -1.5 11.1 48.7-3.0 65.6 54.5 Austria Belgium Canada Denmark Finland France Germany Greece Italy -3.2-10.3-6.5-5.5-2.4-2.5-1.7-3.2-1.7 24.1 76.0 48.4 40.5 18.1 18.2 12.8 24.1 12.7 3.9 2.8 6.6 16.3 8.5 8.6-38.7 84.9 7.3-3.3 10.3-6.6-5.6-2.5-2.5-3.1-7.3-1.7 28.6 79.2 55.9 59.1 27.9 28.0-33.6 117.5 21.1 4.5 3.2 7.6 18.6 9.7 9.8-46.3 93.4 8.4 Japan Netherlands New Zealand Norway Portugal -0.2-8.7-2.9-4.3-3.4 1.6 64.2 21.2 32.1 25.3-8.6 18.4 36.8 41.1 25.1-0.3-8.9-3.8-5.4-3.9-8.4 85.2 62.7 78.3 53.8-10.0 21.0 41.4 46.2 28.4 Spain Sweden United Kingdom -1.4-3.2-2.6 10.4 23.6 19.2 19.8-3.7-6.0-1.7-3.2-2.6 32.9 19.3 12.3 22.5-4.3-6.9 United States -0.8 6.3 8.1-0.9 15.5 9.3 Notes: All percentage changes are calculated as 100ln(x'/x) where x' is the outcome under autarky (d ni for n i) and x is the outcome in the baseline. Table by MIT OCW. Adapted from Table IX on page 1769 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
TABLE X THE GAINS FROM TRADE: LOWERING GEOGRAPHIC BARRIERS Country Percentage Changes in the Case of Mobile Labor Baseline to Zero Gravity Baseline to Doubled Trade Welfare Mfg.Prices Mfg. Labor Welfare Mfg.Prices Mfg. Labor Australia 21.1-156.7 153.2 2.3-17.1-16.8 Austria Belgium Canada 21.6 18.5 18.7-160.3-137.2-139.0 141.5 69.6 11.4 2.8 2.5 1.9-20.9-18.6-14.3 41.1 68.8 3.9 Denmark Finland 20.7 21.7-153.9-160.7 156.9 172.1 2.9 2.8-21.5-20.9 72.6 44.3 France Germany Greece Italy Japan Netherlands New Zealand Norway 18.7 17.3 24.1 18.9 16.6 18.5 22.2 21.7-138.3-128.7-178.6-140.3-123.5-137.6-164.4-161.0-7.0-50.4 256.5 6.8-59.8 67.3 301.4 195.2 2.3 1.9 3.3 2.2 0.9 2.5 2.8 3.1-16.8-14.3-24.8-16.1-6.7-18.5-20.5-22.9 15.5 12.9 29.6 5.7-24.4 65.6 50.2 69.3 Portugal 22.3-165.3 237.4 3.1-22.8 67.3 Spain 20.9-155.0 77.5 2.4-18.0-4.4 Sweden United Kingdom 20.0 18.2-148.3-134.8 118.8 3.3 2.7 2.2-19.7-16.4 55.4 28.5 United States 16.1-119.1-105.1 1.2-9.0-26.2 Notes: All percentage changes are calculated as 100ln(x'/x) where x' is the outcome under lower geographic barriers and x is the outcome in the baseline. Table by MIT OCW. Adapted from Table X on page 1770 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
fraction of labor employed in manufacturing 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 Germany Denmark 0 16 8 4 2 1 0.5 0.25 0.125 0.0625 (toward autarky)... factor increase in geographic barriers... (toward zero gravity) Specialization, technology, and geograhy. Figure by MIT OCW. Adapted from Figure 3 on page 1772 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.
TABLE XI THE BENEFITS OF FOREIGN TECHNOLOGY Country Welfare Consequences of Improved Technology Higher U.S. State of Technology Higher German State of Technology Mobile Labor Immobile Labor Mobile Labor Immobile Labor Australia 27.1 14.9 12.3 4.4 Austria 9.3 2.9 61.8 5.4 Belgium 13.2 3.0 50.7 4.8 Canada 87.4 19.9 9.3 1.3 Denmark 12.2 6.2 62.5 7.1 Finland 11.3 4.3 37.5 3.0 France 10.1 4.2 39.2 3.0 Germany 9.7-11.6 100.0 100.0 Greece 14.0 18.3 38.9 8.0 Italy 9.7 3.9 38.4 3.0 Japan 6.6-0.8 5.9-0.2 Netherlands 12.8 6.8 63.5 8.3 New Zealand 33.8 13.5 15.6 3.9 Norway 13.2 11.7 43.8 6.1 Portugal 14.3 8.6 39.6 4.7 Spain 9.6 7.0 27.3 3.3 Sweden 12.8 1.1 42.7 2.3 United Kingdom 14.6 0.5 38.3 1.6 United States 100.0 100.0 9.7 1.4 Notes: All numbers are expressed relative to the percentage welfare gain in the country whose technology expands. Based on a counterfactual 20 per cent increase in the state of technology for either the United States or Germany. Table by MIT OCW. Adapted from Table XI on page 1773 from Eaton, Jonathan, and Samuel Kortum. "Technology, Geography, and Trade." Econometrica 70, no. 5: 1741-1779.