Trade Liberalization, Saving, and Development
AbstractWhy is there apparently a positive correlation between saving and trade liberalization, in particular for the most successful developing countries? Despite tremendous research efort this puzzle is to a large extent still unresolved. In this general equilibrium model we show one channel which may shed some light on the issue. The basic idea is that trade liberalization may lead firms to use labour in a more indirect way, and thereby increase the incentives to save in order to develop new kinds of intermediate goods. For a backward economy this effect may be particularly strong, in which case trade liberalization possibly initiates a qualitative shift from a labour intensive to a more sophisticated production technology. Possible increases in the export to GDP ratio are then a side effect of the domestic investment and modernization process.
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Bibliographic InfoPaper provided by Norwegian School of Economics and Business Administration- in its series Papers with number 29/98.
Length: 31 pages
Date of creation: 1998
Date of revision:
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Postal: NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, HELLEVEIEN 30, 5035 BERGEN SANDVIKEN NORWAY.
Phone: 5595 9000
Fax: 5595 9100
Web page: http://www.nhh.no/
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TRADE LIBERALIZATION ; SAVINGS ; ECONOMIC DEVELOPMENT;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
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