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North-South Trades and Growth Miracles

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  • Seung Mo Choi

    (University of Chicago)

Abstract

This paper proposes a two-country 'economic' model (in the sense that it contains utility and profit maximization motives), in which a low-income economy enjoys a high growth rate relative to a high-income economy, thanks to importing technologies (or 'machines') invented in the high- income economy. Following Romer (1990), the growth of an economy is sustained by increasing varieties of inputs; while a high-income economy (and a closed economy) should invest in R&D to invent new inputs (or 'machines'), an open, low-income economy may trade with the high-income economy to import them, which reduces the cost of productivity advances. The model can generate the growth paths of the U.S. and the South Korea.

Suggested Citation

  • Seung Mo Choi, 2005. "North-South Trades and Growth Miracles," GE, Growth, Math methods 0507013, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpge:0507013
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    References listed on IDEAS

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    More about this item

    Keywords

    International Trade; Technological Progress; Growth;
    All these keywords.

    JEL classification:

    • F19 - International Economics - - Trade - - - Other
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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