TECHNOLOGICAL CHANGE AND AGRICULTURAL TRADE PATTERNS

An international trade model which explains trade patterns of processed foods relative to textiles using relative technological change and relative factor endowments was developed. This model was tested in the case of the United States and a number of ASEAN countries. Results indicate that exogenous technology drives the trade pattern of the Asian Newly Industrializing Countries (NICs) while endogenous technology drives the trade patterns of the lesser developed ASEAN countries. Significant determinants of endogenous technology were identified: foreign aid flows, research and development expenditures, and market power. Two significant issues were raised in the course of the analysis: (1) the effectiveness of U.S. foreign aid package in developing the United States and the ASEAN countries' agri-based manufacturing industries, and (2) the evolution of the high growth Asian NICs and their impact on the lesser developed ASEAN countries