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North-South Asymmetry in Returns to Scale, Uneven Development, and the Population Puzzle

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  • Hiroaki Sasaki
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    Abstract

    This paper develops a model of North-South trade and economic development to analyze how an increase in the growth rate of population affects the growth rate of real income per capita. We assume that the North is characterized by an increasing-returns-to-scale technology while the South is characterized by a decreasing-returns-to-scale technology. The main results are as follows: (i) an increase in the growth rate of population in the South decreases the growth rate of its own income per capita; (ii) a rise in the growth rate of population in the North either increases or decreases the growth rate of its own income per capita depending on conditions; (iii) population growth in one country raises the growth rate of income per capita in the other country; and (iv) even the decreasing-returns South can experience a positive growth rate of income per capita if a continuous improvement in the terms of trade is larger than a threshold value.

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    File URL: http://hdl.handle.net/10097/55391
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    File URL: http://ir.library.tohoku.ac.jp/re/bitstream/10097/55391/1/terg238.pdf
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    Bibliographic Info

    Paper provided by Graduate School of Economics and Management, Tohoku University in its series TERG Discussion Papers with number 238.

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    Length: 24 pages
    Date of creation: Sep 2008
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    Handle: RePEc:toh:tergaa:238

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    1. Sarkar, Prabirjit, 2001. "Technical Progress and the North-South Terms of Trade," Review of Development Economics, Wiley Blackwell, vol. 5(3), pages 433-43, October.
    2. Ben-David, D & Loewy, M-B, 1997. "Knowledge Dissemination, Capital Accumulation, Trade, and Endogenous Growth," Papers 3-97, Tel Aviv - the Sackler Institute of Economic Studies.
    3. Gabriel J. Felbermayr, 2007. "Specialization on a technologically stagnant sector need not be bad for growth," Oxford Economic Papers, Oxford University Press, vol. 59(4), pages 682-701, October.
    4. Dutt, Amitava Krishna, 1996. "Southern Primary Exports, Technological Change and Uneven Development," Cambridge Journal of Economics, Oxford University Press, vol. 20(1), pages 73-89, January.
    5. Sarkar, Prabirjit, 1997. "Growth and Terms of Trade: A North-South Macroeconomic Framework," Journal of Macroeconomics, Elsevier, vol. 19(1), pages 117-133, January.
    6. Dutt, Amitava Krishna, 1992. "A Kaldorian Model of Growth and Development Revisited: Comment," Oxford Economic Papers, Oxford University Press, vol. 44(1), pages 156-68, January.
    7. Carmen Dolores �lvarez-Albelo & Fernando Perera-Tallo, 2008. "The Transmission of Sustained Growth through the Terms of Trade in an Endogenous Growth Model," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 386-396, 05.
    8. Darity, William A, Jr, 1990. "The Fundamental Determinants of the Terms of Trade Reconsidered: Long-run and Long-period Equilibrium," American Economic Review, American Economic Association, vol. 80(4), pages 816-27, September.
    9. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-84, August.
    10. Eicher, Theo S. & Turnovsky, Stephen J., 2001. "Transitional dynamics in a two-sector non-scale growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 25(1-2), pages 85-113, January.
    11. 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.
    12. Christiaans, Thomas, 2008. "International trade and industrialization in a non-scale model of economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 19(3), pages 221-236, September.
    13. Eicher, Theo S & Turnovsky, Stephen J, 1999. " Convergence in a Two-Sector Nonscale Growth Model," Journal of Economic Growth, Springer, vol. 4(4), pages 413-28, December.
    14. Jonathan Temple, 2005. "Dual economy models: a primer for growth economists," Bristol Economics Discussion Papers 05/574, Department of Economics, University of Bristol, UK.
    15. Molana, Hassan & Vines, David, 1988. "North-South Growth and the Terms of Trade," CEPR Discussion Papers 248, C.E.P.R. Discussion Papers.
    16. Hiroaki Sasaki, 2008. "International Trade And Industrialization With Capital Accumulation And Skill Acquisition," Manchester School, University of Manchester, vol. 76(4), pages 464-486, 07.
    17. Lutz G. Arnold, 2006. "The Dynamics of the Jones R&D Growth Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 143-152, January.
    18. Kohli, Ulrich, 2004. "Real GDP, real domestic income, and terms-of-trade changes," Journal of International Economics, Elsevier, vol. 62(1), pages 83-106, January.
    19. Osang, Thomas & Pereira, Alfredo, 1997. "Savings, Volume of Trade, and Growth," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 310-23, August.
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