22%20Pushing%20Exports--Strategic%20Trade%20Policy

22%20Pushing%20Exports--Strategic%20Trade%20Policy -...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 1 Pushing Exports: Strategic Trade Policy •In t rodu c t ion • High-Technology Exports and Externalities • Strategic Trade Policy 2 Introduction Arguments for government intervention in trade in advanced countries focus on: 1. High-technology and externalities and 2. Strategic trade policy in highly concentrated industries. 3 Introduction • Any argument for a government policy in international trade should be based on offsetting some pre-existing domestic market failure . 4 Introduction Two kinds of market failures have been identified that seem to be present and relevant to the trade policies of advanced countries . 1. The problem of appropriability
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 5 •Th e r e i s a potential market failure arising from difficulties of appropriating knowledge. –Where such positive externalities can be shown to be important, there is a good case for subsidizing the industry. – In advanced countries, this argument has been used with respect to high-technology industries in which the generation of knowledge is in many ways the central aspect of the enterprise. 6 D S D 0 S 0 Q P P W S 0 Q P MEB X 0 7 High tech firms devote a great deal of their resources to improving technology by either: 1. Explicit spending on research and development, or 2. Being willing to take initial losses on new products and processes to gain experience. 8 The Case for Government Support:
Background image of page 2
3 9 • The Case for Government Support: – A general principle is that trade and industrial policy should be targeted specifically on the activity in which the market failure occurs. • A policy should seek to subsidize the generation of knowledge that firms cannot appropriate.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/09/2011 for the course ECON 181 taught by Professor Kasa during the Fall '07 term at Berkeley.

Page1 / 12

22%20Pushing%20Exports--Strategic%20Trade%20Policy -...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online