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Global Income Divergence, Trade and Industrializatiion: The Geography of Growth Take-Offs

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  • Richard E. Baldwin
  • Philippe Martin
  • Gianmarco I. P. Ottaviano

Abstract

This paper takes a step towards formalizing the theoretical interconnections among four post-Industrial Revolution phenomena - the industrialization and growth take-off of rich northern' nations, massive global income divergence, and rapid trade expansion. Specifically, we present a stages-of-growth model in which the four phenomena are jointly endogenous and all are triggered by a gradual fall in the cost of doing business internationally. In the first stage, while trade costs are high, industry is dispersed and growth is low. In the second stage, the north industrializes rapidly, growth takes off and the south diverges. In the third stage, high growth becomes self sustaining. The model shows under which conditions, in a fourth stage, the south can quickly industrialize and converge.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6458.

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Date of creation: Mar 1998
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Publication status: published as Baldwin, Richard E., Philippe Martin and Gianmarco I. P. Ottaviano. "Global Income Divergence, Trade, And Industrialization: The Geography Of Growth Take-Offs," Journal of Economic Growth, 2001, v6(1,Mar), 5-37.
Handle: RePEc:nbr:nberwo:6458

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