Path Interdependence Among Early and Late Bloomers in a Dynamic Heckscher-Ohlin Model
AbstractThe closed economy neoclassical growth model predicts convergence to a capital stock level that is independent of its initial level, suggesting that discrepancies in per capita income among the world’s economies should largely disappear in the long-run. This paper shows that international trade among countries differing only in their level of initial capital is sufficient to generate long-run income differences across countries. The long-run level of capital of the country most initially endowed with capital is shown to exceed the level of capital otherwise obtained in autarchy while the country least endowed converges to a capital stock lower than would otherwise be obtained in autarchy.
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Bibliographic InfoPaper provided by University of Minnesota, Economic Development Center in its series Bulletins with number 7183.
Date of creation: 2007
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International trade; Development; Multiple Equilibria; International Relations/Trade; O41; F43; F11;
Find related papers by JEL classification:
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
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