Technological Progress and International Trade: The Case of the Less Developed ASEAN Countries

Many trade economists believe that the introduction of technical change into an otherwise Heckscher-Ohlin (H-0) model could result in a more comprehensive explanation of trade flows. However, most of the investigations of this hypothesis have been based on the limiting assumption that technology is exogenously determined, and have narrowly focused on the manufacturing sector. In addition, most works on technology-based trade have dealt exclusively with the United States, which is a significant drawback in testing theories which seem to have originated with American observations in the first place (Deardoff, 1985). This study aims to fill part of this gap by analysing the relationship between endogenous technology and international trade of the less developed countries of Southeast Asia. It tests the significance of a technology-trade relationship in both the agricultural and the agribased manufacturing sectors of their economies. Since Asia is considered to be the most dynamic region of the world in terms of economic growth and development, it is appropriate that this investigation be conducted on an area where 'newly industrializing economies' have originated and will continue to do so