Author
Listed:
- Kotlewski, Dariusz Cezary
Abstract
The aim of the article is to explain how international trade impacts the level of economic growth in both the short and long term. At first the analysis deals with several versions of the Factor Endowment Theory and the reasons for its poor empirical evidence are theoretically explained. The Integrated Equilibrium technique is used to account for all the supply-side motives to trade, which is possible thanks to D.R. Davis’ theory of intra-industry trade. This analysis shows that trade generated by endowment differentials will never find its clear representation in aggregated macroeconomic statistical figures, because it is submerged in a larger entity of trade motivated by the need for differentiation. Only when there is no trade at all or it is insufficient the endowments theory can be useful to create some new streams of trade. These facts are already present in the established theory, but some new technical solutions and irrefutable explanations are contributed by this analysis. In light of the above-mentioned limitations, an initial model of P.R. Krugman, inspired by the well-known formula of A.K. Dixit and J. Stiglitz for diversity-motivated trade, is developed. The model is generalized by extending its basics beyond the unique factor (i.e. labor) used by P.R. Krugman in order to cover all the factors and save some of the logic of the endowments theory. However, the need to use a Cobb-Douglas type function has been confirmed in the process. P.R. Krugman’s attempt to consider all goods as perfectly symmetric against the utility function has been proven as definitely feasible and a precondition to express the utility function désormais in monetary units. This, in turn, allowed the author to deliver his main contribution by setting a formal model explaining how international trade (and, for obvious reasons, also inter-regional trade in the case of large countries) impacts the level of economic growth. To outline the limitations of the proposed model, the long-term impacts of trade have been presented based on P.R. Krugman’s New Economic Geography theory, combined with the author’s own findings about non-labor dependent industries belonging to the so-called second sector. The main conclusion is that, at a given moment of economic history, the growth of an economy is strictly related to its international and inter-regional trade, and this can be used to combat downturns. At the same time, a process of differentiation sets in in the level of economic development in the longer term between countries and regions. However, this process is decreasing thanks to the development and modernization of the second sector.
Suggested Citation
Kotlewski, Dariusz Cezary, 2013.
"Wpływ handlu międzynarodowego na wzrost gospodarczy,"
Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2013(1-2), February.
Handle:
RePEc:ags:polgne:358665
DOI: 10.22004/ag.econ.358665
Download full text from publisher
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:polgne:358665. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/irsghpl.html .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.