Abstract
This paper develops a factor-proportions model of international trade and foreign direct investment using Leibebstein's work on the multi-faceted nature of entrepreneurial activity. S-type manager-abundant countries export research and development-intensive goods, while G-type manager-abundant countries export non-research and development-intensive goods (i.e., standardized commodities). Foreign direct investment is generated as a response to barriers to trade in general. Empirically, it is shown that: manufactures are R & D and labor; and international differences in innovation can be explained in terms of social, cultural, and psychological factors. [440]
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