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Trade, Southern Integration, and Uneven Development

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  • Trofimov, Georgi

    (The Institute for Financial Studies)

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    Abstract

    The paper demonstrates how trade between developing countries can cause the divergence of long-run growth among these countries. The model describes two symmetric countries trading with each other and the industrial rest of the world. Bilateral trade occurs at any moment if the countries have different numbers of intermediate varieties. The country with a larger number produces more manufactured goods than the other country does. In the bilateral trade the advanced country exports manufactures and imports basic goods and can develop the comparative advantage over the other country. The model demonstrates that Southern integration leads to uneven development paths if there is a high complementarity between intermediate inputs.

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    Bibliographic Info

    Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 488.

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    Length: 32 pages
    Date of creation: 01 Aug 1997
    Date of revision:
    Handle: RePEc:hhs:iuiwop:0488

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    Related research

    Keywords: Trade; Intermediate inputs; Multiple equilibria;

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