Trade and Development in a Labor Surplus Economy

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Trade and Development in a Labor Surplus Economy

Author Info

Edward B. Barbier
Michael Rauscher () (University of Rostock)

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Abstract

This paper looks at a model in which two countries trade agricultural and manufactured commodities. The manufactured-goods sector produces with increasing returns to scale under conditions of monopolistic competition. It is shown that an increase in land endowment (or an increase in agricultural productivity) can have negative welfare implications for both countries. This outcome can result under three different scenarios: asymmetries across countries, i.e. a North-South model, a neoclassical labor market in the home country's instead of a Lewisian market, and alternative utility functions.

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Publisher Info
Paper provided by University of Rostock, Institute of Economics, Germany in its series Thuenen-Series of Applied Economic Theory with number 53.

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Length: 34 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:ros:wpaper:53

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Other versions of this item:

Article
- Edward B. Barbier & Michael Rauscher, 2007. "Trade and Development in a Labor Surplus Economy," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 7(1). [Downloadable!]
Paper
- Edward B. Barbier & Michael Rauscher, 2005. "Trade and Development in a Labor Surplus Economy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses

This paper has been announced in the following NEP Reports:

NEP-AGR-2005-12-09 (Agricultural Economics)
NEP-ALL-2005-12-09 (All new papers)
NEP-INT-2005-12-09 (International Trade)
NEP-UPT-2005-12-09 (Utility Models & Prospect Theory)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Edward B. Barbier, 2005. "Frontier Expansion and Economic Development," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 286-303, 04. [Downloadable!] (restricted)
Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December. [Downloadable!] (restricted)
Taylor, Alan M & Williamson, Jeffrey G, 1994. "Capital Flows to the New World as an Intergenerational Transfer," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 348-71, April. [Downloadable!] (restricted)
Other versions:
- Taylor, A.M., 1991. "Capital Flows to the New World as an Intergenerational Transfer," Harvard Institute of Economic Research Working Papers 1579, Harvard - Institute of Economic Research.
- Alan M. Taylor & Jeffrey G. Williamson, 1991. "Capital Flows to the New World as an Intergenerational Transfer," NBER Historical Working Papers 0032, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Joseph Francois & Hans van Meijl & Frank van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR, CES, MSH, vol. 20(42), pages 349-391, 04. [Downloadable!] (restricted)
Findlay, Ronald, 1992. "The Roots of Divergence: Western Economic History in Comparative Perspective," American Economic Review, American Economic Association, vol. 82(2), pages 158-61, May. [Downloadable!] (restricted)
Other versions:
- Findlay, R., 1991. "The Roots of Divergence: Western Economic History in Comparative Perspective," Discussion Papers 1991_51, Columbia University, Department of Economics.
Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December. [Downloadable!] (restricted)
Other versions:
- Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
- Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Matsuyama, K., 1992. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Papers e-92-3, Stanford - Hoover Institution.
Burgstaller, A. & Saavedra-Rivano, N., 1984. "Capital mobility and growth in a North-South model," Journal of Development Economics, Elsevier, vol. 15(1-3), pages 213-237. [Downloadable!] (restricted)
Krugman, Paul, 1981. "Trade, accumulation, and uneven development," Journal of Development Economics, Elsevier, vol. 8(2), pages 149-161, April. [Downloadable!] (restricted)
Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
Other versions:
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics. [Downloadable!]
Findlay, Ronald, 1980. "The Terms of Trade and Equilibrium Growth in the World Economy," American Economic Review, American Economic Association, vol. 70(3), pages 291-99, June. [Downloadable!] (restricted)
Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November. [Downloadable!] (restricted)

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