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De-industrialization and Trade

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  • Spilimbergo, Antonio

Abstract

Baumol (1967) showed that the rate of growth of an economy slows down if a sector has lower productivity than others and the demand between goods is inelastic. This paper points out that trade is equivalent to technological progress in the tradable sector. Therefore an open economy has higher income but lower growth than a closed economy. Moreover, the reallocation of activity from one country to another country can have a negative effect on welfare when there is country-specific learning by doing.

Suggested Citation

  • Spilimbergo, Antonio, 1995. "De-industrialization and Trade," IDB Publications (Working Papers) 6189, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:6189
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    References listed on IDEAS

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    1. Krugman, Paul, 1989. "Differences in income elasticities and trends in real exchange rates," European Economic Review, Elsevier, vol. 33(5), pages 1031-1046, May.
    2. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity across Industries and Countries: Time Series Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 135-146, February.
    3. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 369-405.
    4. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150-150, March.
    5. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    6. Zvi Griliches, 1992. "Output Measurement in the Service Sectors," NBER Books, National Bureau of Economic Research, Inc, number gril92-1, May.
    7. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-1219, December.
    8. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
    9. Wieczorek J., 1995. "Sectoral trends in world employment," ILO Working Papers 993083973402676, International Labour Organization.
    10. Victor R. Fuchs, 1968. "The Service Economy," NBER Books, National Bureau of Economic Research, Inc, number fuch68-1, May.
    11. Bernard, Andrew B & Jones, Charles I, 1996. "Comparing Apples to Oranges: Productivity Convergence and Measurement across Industries and Countries," American Economic Review, American Economic Association, vol. 86(5), pages 1216-1238, December.
    12. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
    13. Wilson, Charles A, 1980. "On the General Structure of Ricardian Models with a Continuum of Goods: Applications to Growth, Tariff Theory, and Technical Change," Econometrica, Econometric Society, vol. 48(7), pages 1675-1702, November.
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    Citations

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    Cited by:

    1. Raiser, Martin & Schaffer, Mark & Schuchhardt, Johannes, 2004. "Benchmarking structural change in transition," Structural Change and Economic Dynamics, Elsevier, vol. 15(1), pages 47-81, March.
    2. Raphael Bergoeing & Timothy J. Kehoe & Vanessa Strauss-Kahn & Kei-Mu Yi, 2004. "Why Is Manufacturing Trade Rising Even as Manufacturing Output is Falling?," American Economic Review, American Economic Association, vol. 94(2), pages 134-138, May.
    3. Hiroaki Sasaki, 2011. "Export of Deindustrialization and Anti-Balassa-Samuelson Effect: The Consequences of Productivity Growth Differential," Discussion papers e-10-015, Graduate School of Economics Project Center, Kyoto University.
    4. Hea-Jung Hyun & Yong Joon Jang, 2015. "Comparative Advantage, Outward Foreign Direct Investment and Average Industry Productivity: Theory and Evidence," Korean Economic Review, Korean Economic Association, vol. 31, pages 327-357.
    5. Magali Dauvin, 2013. "Energy prices and the real exchange rate of commodity-exporting countries," EconomiX Working Papers 2013-33, University of Paris Nanterre, EconomiX.
    6. Sasaki, Hiroaki, 2012. "Endogenous phase switch in Baumol's service paradox model," Structural Change and Economic Dynamics, Elsevier, vol. 23(1), pages 25-35.
    7. Pontes, José Pedro & Pires, Armando J. Garcia, 2021. "A geographical theory of (De)industrialization," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 567-574.
    8. José Pedro Pontes & Armando J. Garcia Pires, 2020. "Spatial trends of manufacturing a Von Thünen Mills approach," Working Papers REM 2020/0114, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    9. Armando J. Garcia Pires & José Pedro Pontes, 2021. "(De)Industrialization, Technology and Transportation," Open Economies Review, Springer, vol. 32(3), pages 527-538, July.

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    More about this item

    Keywords

    WP-311; industrialization;

    JEL classification:

    • F1 - International Economics - - Trade
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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