Trade Liberalization, Economic Growth, and Income Distribution in a Multiple-cone Neoclassical Growth Model
AbstractThe empirical literature on trade liberalization reflects two puzzles. First, the effect of trade liberalization on economic growth is ambiguous. Second, the effect of trade liberalization by developing countries on their income distribution is ambiguous. This paper attempts to explain these two puzzles at the same time, based on a multiple-cone neoclassical growth model. The model shows that countries that are labor abundant in a global sense may see a rise in income inequality and a decline in per capita GDP and per capita consumption with liberalization if they are capital abundant in a local sense. The results suggest that the two puzzles can be explained by the existence of global and local factor abundances.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-061.
Date of creation: Apr 2009
Date of revision:
Trade Liberalization; Medium-run Growth; Income Distribution; Multiple-cone Model; Stolper-Samuelson Theorem;
Other versions of this item:
- Kozo Kiyota, 2012. "Trade liberalization, economic growth, and income distribution in a multiple-cone neoclassical growth model," Oxford Economic Papers, Oxford University Press, vol. 64(4), pages 655-674, October.
- Kiyota, Kozo, 2009. "Trade Liberalization, Economic Growth, and Income Distribution in a Multiple-cone Neoclassical Growth Model," CCES Discussion Paper Series 17, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
- F1 - International Economics - - Trade
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-25 (All new papers)
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- Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007.
"Distributional Effects of Globalization in Developing Countries,"
NBER Working Papers
12885, National Bureau of Economic Research, Inc.
- Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 45(1), pages 39-82, March.
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