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Economic Takeoffs in a Dynamic Process of Globalization

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  • Eric W. Bond
  • Ronald W. Jones
  • Ping Wang

Abstract

The paper develops a dynamic general-equilibrium framework to illustrate that trade liberalization may speed up the process of globalization and industrialization by enabling a small open economy to reallocate production factors to modern export sectors where increasing returns to experience are present. The authors emphasize the role of knowledge in service activities related to the export of modern sector goods, which has the form of a public good that can be utilized in exporting of other modern sector goods. As a consequence of this knowledge accumulation, the economy begins to take off and exhibits more rapid rates of wage and output growth. The accumulation of knowledge also shifts comparative advantage in the modern sector to more service-intensive goods, thus leading to a natural evolution of comparative advantage. These results lend theoretical support to the different development experiences in the 1960s between East Asia and Latin America. Copyright Blackwell Publishing Ltd 2005..

Suggested Citation

  • Eric W. Bond & Ronald W. Jones & Ping Wang, 2005. "Economic Takeoffs in a Dynamic Process of Globalization," Review of International Economics, Wiley Blackwell, vol. 13(1), pages 1-19, February.
  • Handle: RePEc:bla:reviec:v:13:y:2005:i:1:p:1-19
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    Cited by:

    1. Trindade, Vitor, 2005. "The big push, industrialization and international trade: The role of exports," Journal of Development Economics, Elsevier, vol. 78(1), pages 22-48, October.
    2. Wang, Ping & Xie, Danyang, 2004. "Activation of a modern industry," Journal of Development Economics, Elsevier, vol. 74(2), pages 393-410, August.
    3. Eric W. Bond & Yan Ma, 2013. "Learning by Doing and Fragmentation," Pacific Economic Review, Wiley Blackwell, vol. 18(5), pages 603-627, December.
    4. Shahbaz, Muhammad, 2012. "Does trade openness affect long run growth? Cointegration, causality and forecast error variance decomposition tests for Pakistan," Economic Modelling, Elsevier, vol. 29(6), pages 2325-2339.
    5. Nicholas Sim, 2005. "Service liberalization, endogenous industrial composition and modernization," Applied Economics Letters, Taylor & Francis Journals, vol. 12(3), pages 161-163.
    6. Ming-Jen Chang & Ping Wang & Danyang Xie, 2016. "The Dynamic Process of Economic Takeoff and Industrial Transformation," Frontiers of Economics in China, Higher Education Press, vol. 11(1), pages 60-87, March.

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