In the Two-Sector Learning-By-Doing Model by Grossman and Helpman (1990)

Multiple Choice

In the two-sector learning-by-doing model by Grossman and Helpman (1990) with technological transfers and international trade, countries with a comparative advantage in fast growing industries will:

A) have permanently faster rates of growth than countries with a comparative advantage in slow growing industries.
B) have temporarily faster rates of growth than countries with a comparative advantage in slow growing industries, but the differences in growth rates will eventually disappear.
C) have temporarily faster rates of growth than countries with a comparative advantage in slow growing industries, but the differences in growth rates will eventually disappear and will become stagnant as technological transfers erodes profit margins of the fast growing industry/country.
D) None of the above.