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Trade and Development in a Labor Surplus Economy

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Author Info
Edward B. Barbier ()
Michael Rauscher ()

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Abstract

This paper looks at a model in which two countries trade agricultural and manufactured commodities. The manufactured-goods sector produces with increasing returns to scale under conditions of monopolistic competition. It is shown that an increase in land endowment (or an increase in agricultural productivity) can have negative welfare implications for both countries. This outcome can result under three different scenarios: asymmetries across countries, i.e. a North-South model, a neoclassical labor market in the home country's instead of a Lewisian market, and alternative utility functions.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1481.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1481

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Related research
Keywords: international trade; labor surplus economy; land expansion; monopolistic competition; North-South model;

Other versions of this item:

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Edward B. Barbier, 2005. "Frontier Expansion and Economic Development," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 286-303, 04. [Downloadable!] (restricted)
  2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December. [Downloadable!] (restricted)
  3. Taylor, Alan M & Williamson, Jeffrey G, 1994. "Capital Flows to the New World as an Intergenerational Transfer," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 348-71, April. [Downloadable!] (restricted)
    Other versions:
  4. Kala Krishna & Cemile Yavas, 2004. "Immiserizing Growth in a Closed Economy," Scandinavian Journal of Economics, Blackwell Publishing, vol. 106(1), pages 143-158, 03. [Downloadable!] (restricted)
  5. Joseph Francois & Hans van Meijl & Frank van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR, CES, MSH, vol. 20(42), pages 349-391, 04. [Downloadable!] (restricted)
  6. Findlay, Ronald, 1992. "The Roots of Divergence: Western Economic History in Comparative Perspective," American Economic Review, American Economic Association, vol. 82(2), pages 158-61, May. [Downloadable!] (restricted)
    Other versions:
  7. Eaton, Jonathan & Panagariya, Arvind, 1982. "Growth and Welfare in a Small, Open Economy," Economica, London School of Economics and Political Science, vol. 49(196), pages 409-19, November. [Downloadable!] (restricted)
  8. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December. [Downloadable!] (restricted)
    Other versions:
  9. Burgstaller, A. & Saavedra-Rivano, N., 1984. "Capital mobility and growth in a North-South model," Journal of Development Economics, Elsevier, vol. 15(1-3), pages 213-237. [Downloadable!] (restricted)
  10. E. Kwan Choi, 2001. "Neighbour-Immiserizing Growth: The Asian Crisis," The Japanese Economic Review, Japanese Economic Association, vol. 52(4), pages 405-416. [Downloadable!] (restricted)
  11. Krugman, Paul, 1981. "Trade, accumulation, and uneven development," Journal of Development Economics, Elsevier, vol. 8(2), pages 149-161, April. [Downloadable!] (restricted)
  12. Sen, Partha, 1997. "Immiserizing Growth in a Monopolistic Competition Model," Review of International Economics, Blackwell Publishing, vol. 5(2), pages 188-94, May.
  13. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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  14. Findlay, Ronald, 1980. "The Terms of Trade and Equilibrium Growth in the World Economy," American Economic Review, American Economic Association, vol. 70(3), pages 291-99, June. [Downloadable!] (restricted)
  15. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November. [Downloadable!] (restricted)
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