Why might a country want to develop its comparative disadvantage industries? A general equilibrium analysis
AbstractThis paper develops a general equilibrium 2x2 Ricardian model that demonstrates the possibility of immiserising growth as a result of a productivity improvement in a country¡¯s export industry. The model also shows that immiserising growth can be avoided by improving the productivity of the country¡¯s comparative disadvantage industry. However this strategy may inflict harm on its trading partner. In comparison, a balanced growth strategy can improve welfare of the growing country without hurting its trading partner.
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Bibliographic InfoPaper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 436.
Length: 19 pages
Date of creation: 2011
Date of revision:
2x2 Ricardian model; immiserising growth; balanced growth;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-21 (All new papers)
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