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Specialization and Dynamics in a Trade Model

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  • R. MANNING

Abstract

An economy which can produce two tradeable goods, and an investment good which augments capital stocks, is shown to specialize in an optimal stationary state unless it is in the interior of a continuum from which no change is ever needed. On the traverse to a stationary state, non‐specialization occurs if at all for only a finite time. Although the instantaneous production frontier is concave, the long‐run frontier is linear, but the long‐run rate of product transformation differs from the supply price ratio with positive time‐preference. Long‐run specialization may differ from that predicted by long‐run comparative advantage.

Suggested Citation

  • R. Manning, 1981. "Specialization and Dynamics in a Trade Model," The Economic Record, The Economic Society of Australia, vol. 57(3), pages 251-260, September.
    • Handle: RePEc:bla:ecorec:v:57:y:1981:i:3:p:251-260
    DOI: 10.1111/j.1475-4932.1981.tb01059.x
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    References listed on IDEAS

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    1. Kemp, Murray C & Long, Ngo Van, 1979. "International Trade with an Exhaustible Resource: A Theorem of Rybczynski Type," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(3), pages 671-677, October.
    2. H. Oniki & H. Uzawa, 1965. "Patterns of Trade and Investment in a Dynamic Model of International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(1), pages 15-37.
    3. Manning, Richard, 1982. "Trade, Education and Growth: The Small-Country Case," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(1), pages 83-106, February.
    4. Manning, R., 1979. "Two theorems concerning optimal educational policy in balanced growth," Journal of Economic Theory, Elsevier, vol. 21(3), pages 465-472, December.
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    1. Koichi Futagami & Akihiko Kaneko & Yoshiyasu Ono & Akihisa Shibata, 2008. "International Asset Trade, Capital Income Taxation, and Specialization Patterns," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 743-763, October.
    2. Yoshiyasu Ono & Akihisa Shibata, 2010. "Time Patience and Specialization Patterns in the Presence of Asset Trade," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(1), pages 93-112, February.
    3. Yoshiyasu Ono & Akihisa Shibata, 2006. "Capital Income Taxation and Specialization Patterns: Investment Tax vs. Saving Tax," ISER Discussion Paper 0649, Institute of Social and Economic Research, Osaka University.
    4. Brecher, Richard A. & Chen, Zhiqi & Choudhri, Ehsan U., 2005. "Dynamic stability in a two-country model of optimal growth and international trade," Journal of Economic Dynamics and Control, Elsevier, vol. 29(3), pages 583-594, March.
    5. Akihiko Yanase & Makoto Tawada, 2017. "Public infrastructure for production and international trade in a small open economy: a dynamic analysis," Journal of Economics, Springer, vol. 121(1), pages 51-73, May.
    6. Brigitte Desroches & Michael Francis, 2006. "Institutional Quality, Trade, and the Changing Distribution of World Income," Staff Working Papers 06-19, Bank of Canada.
    7. Xiaobing Xing & Jiexiang Xu, 2014. "The saving rate and the upgrade of the trade commodity structure in developing countries: A dynamic H-O model under an oligopolistic market structure," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(8), pages 1145-1169, December.

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