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Trade Patterns and Non-Scale Growth between Two Countries


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  • Hiroaki Sasaki
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    This paper builds a two-country, two-sector (manufacturing and agriculture), non-scale growth model and investigates the relationship between trade patterns and the growth rate of per capita real consumption. If the population growth rate of the home country is higher than that of the foreign country, the following results are obtained. (1) Under autarky, the growth rate of per capita real consumption is higher in the home country than in the foreign country. (2) Under free trade, if the home country completely specializes in manufacturing and the foreign country asymptotically completely specializes in agriculture, then the growth rate of the foreign country is higher than that of the home country, though this trade pattern is not sustainable in the long run. (3) Under free trade, if the home country produces both goods and the foreign country asymptotically completely specializes in agriculture, then the growth rates of the home country and the foreign country are equal, and this trade pattern is sustainable in the long run.

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    Bibliographic Info

    Paper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-12-006.

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    Length: 26 pages
    Date of creation: Aug 2012
    Date of revision:
    Handle: RePEc:kue:dpaper:e-12-006

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    Keywords: non-scale growth model; trade patterns; population growth; per capita growth;

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    1. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    2. Felbermayr, Gabriel J., 2004. "Specialization on a Technologically Stagnant Sector Need Not Be Bad for Growth," Center for European, Governance and Economic Development Research Discussion Papers 24, University of Goettingen, Department of Economics.
    3. repec:fth:stanho:e-92-3 is not listed on IDEAS
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