The Solow model concludes that steady-state growth is due to technological change. Applied
to a cross-country context, one would, therefore, infer that steady-state differences in
output per person are due to differences in technology. Under general conditions, only
Harrod-neutral differences in technology would be consistent with steady-state income
differences. Harrod-neutral differences in technology explain steady-state differences in
factor intensity for a constant capital–output ratio and a constant profit rate. In line with
this implication, my empirical results suggest that the cross-country data on output per
worker can be consistently summarized by a specification that allows for international
variation in technology conditional on a constant capital–output ratio. This result appears
to be more in line with the Solow model than the results presented in the seminal paper
on the cross-country empirics of growth by MRW, who find that the international data
on output per worker can be consistently summarized by a specification that allows
for international variation in the capital–output ratio conditional on a constant level of
technology.
Leaving aside which empirical specification is actually closer to the Solow model, the
idea that international differences in output per person may be explained by international
differences in technology appears to provide a useful restriction for empirical studies of trade.
Even in a simple neoclassical 2 × 2 trade model, cross-country differences in Harrod-neutral
technology may support different cones of specialization. Since the predicted sectoral factor
allocations and the subsequent pattern of trade depend on the cone of specialization that a
specific country belongs to, it is hardly surprising that empirical studies of trade that do not
allow for international differences in Harrod-neutral technology may fail to predict observed
sector allocations and trade patterns. As it seems, the Solow model offers an insight that has
not fully been exploited by trade economists.