North-South Ricardian trade and growth under the balance-of-payments constraint
AbstractThis paper analyzes the growth rates of two countries and the bilateral income disparity in relation to North-South trade mainly from the viewpoint of the South. We extend a Ricardian trade model with a continuum of goods in order to consider a situation where the South faces the balance-of-payments constraint while the North is in full employment. Using the model, we show that depending on the size of a technological parameter, two possibilities arise with regard to the growth of the South: (1) the South can catch up with the North in income level by expanding its comparative advantage sectors, and (2) the South, in contrast, fails to catch up with the North in spite of expanding its comparative advantage sectors. Moreover, we show that if the South is in the catching-up process, a policy intended to improve its international price competitiveness exerts a positive effect on its growth, thereby promoting the catching-up process, whereas if the South is in the falling-behind process, such a policy exerts a negative effect on its growth, thereby leading to immiserizing growth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.
Volume (Year): 31 (2008)
Issue (Month): 2 (December)
Contact details of provider:
Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348
cumulative causation; North-South relation; Ricardian trade; shifts in comparative advantage; Thirlwall's law;
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Anthony P. Thirlwall, 2011.
"Balance of payments constrained growth models: history and overview,"
PSL Quarterly Review,
Economia civile, vol. 64(259), pages 307-351.
- A. P. Thirlwall, 2011. "Balance of Payments Constrained Growth Models: History and Overview," Studies in Economics 1111, Department of Economics, University of Kent.
- Stefano Lucarelli & Daniela Palma & Roberto Romano, 2013. "Quando gli investimenti rappresentano un vincolo. Contributo alla discussione sulla crisi italiana nella crisi internazionale," Moneta e Credito, Economia civile, vol. 66(262), pages 167-203.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Nguyen).
If references are entirely missing, you can add them using this form.