Neoclassical growth, manufacturing agglomeration, and terms of trade
AbstractThis paper presents an integrated view of economic growth, development traps, and economic geography. We explain why there is income convergence among some countries (neoclassical regime) and income divergence among others (poverty trap regime). Income convergence (divergence) and manufacturing industry diffusion (agglomeration) are re-enforcing each other in a cumulative process. Moreover, trade openness may trigger a catch-up process of an economy that is stuck in a \"poverty trap\". This catch-up is characterized by an increase in the investment-to-GDP ratio and an improvement of the terms of trade. A new dynamic welfare gain of trade liberalization is identified, which is likely to be large.
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Bibliographic InfoPaper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 16-1998.
Length: 43 pages
Date of creation: 01 Jan 1998
Date of revision:
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Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
Phone: 38 15 25 75
Fax: 38 15 26 65
Web page: http://www.cbs.dk/departments/econ/
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Other versions of this item:
- Dieter M. Urban, 2007. "Neoclassical Growth, Manufacturing Agglomeration, and Terms of Trade," Review of International Economics, Wiley Blackwell, vol. 15(5), pages 1014-1035, November.
- Dieter M. Urban, 2000. "Neoclassical Growth, Manufacturing Agglomeration and Terms of Trade," Development Working Papers 136, Centro Studi Luca d\'Agliano, University of Milano.
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
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- Thomas Straubhaar & Marc Suhrcke & Dieter Urban, 2002.
"Divergence – Is it Geography?,"
Development Working Papers
158, Centro Studi Luca d\'Agliano, University of Milano.
- Baldwin, Richard & Martin, Philippe, 2003.
"Agglomeration and Regional Growth,"
CEPR Discussion Papers
3960, C.E.P.R. Discussion Papers.
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