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The international trade as the sole engine of growth for an economy

Author

Listed:
  • Carmen D. Álvarez-Albelo

    (Departamento de Análisis Económico, Facultad de Ciencias Económicas, Universidad de La Laguna and CREB)

  • Antonio Manresa

    (CREB, Universitat de Barcelona)

  • Monica Pigem-Vigo

    (CREB, Universitat de Barcelona)

Abstract

Can international trade act as the sole engine of growth for an economy? If yes, what are the mechanisms through which trade operates in transmitting permanent growth? This paper answers these questions with two simple two-country models, in which only one country enjoys sustained growth in autarky. The models differ in the assumptions on technical change, which is either labour- or capital-augmenting. In both cases, the stagnant economy imports growth by trading. In the first model, growth is transmitted because of permanent increases in the trade volume. In the alternative framework, the stagnant economy imports sustained growth because its terms of trade permanently improve.

Suggested Citation

  • Carmen D. Álvarez-Albelo & Antonio Manresa & Monica Pigem-Vigo, 2009. "The international trade as the sole engine of growth for an economy," Working Papers XREAP2009-06, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2009.
    • Handle: RePEc:xrp:wpaper:xreap2009-06
    as

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    File URL: http://www.xreap.cat/RePEc/xrp/pdf/XREAP2009-6.pdf
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    File URL: http://www.xreap.cat/RePEc/xrp/pdf/XREAP2009-6.pdf
    File Function: Revised version, 2009
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    References listed on IDEAS

    as
    1. Germà Bel & Xavier Fageda, 2008. "Privatization and competition in the delivery of local services: An empirical examination of the dual market hypothesis," Working Papers XREAP2008-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Apr 2008.
    2. Matas, Anna & Raymond, José-Luis & Roig, José-Luis, 2009. "Car ownership and access to jobs in Spain," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(6), pages 607-617, July.
    3. Agustí Segarra-Blasco, 2007. "Innovation, R&D Spillovers and Productivity: The Role of Knowledge-Intensive Services," Working Papers XREAP2007-12, Xarxa de Referència en Economia Aplicada (XREAP), revised Nov 2007.
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    Cited by:

    1. Carmen D. Álvarez-Albelo & Antonio Manresa & Monica Pigem-Vigo, 2015. "Growing through trade: the role of foreign growth and domestic tariffs," Working Papers XREAP2015-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Nov 2015.
    2. Muhammad Sri Wahyudi Suliswanto & David Kaluge, 2012. "Globalization and gross domestic product construction in ASEAN," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 4(2), pages 155-167, April.

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    More about this item

    Keywords

    international trade; stagnant economies; growth transmission; mechanisms of transmission.;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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