Deindustrialization and Trade
This paper extends the Dornbusch-Fisher-Samuelson (1977) model to explain deindustrialization and trade; this extension follows Baumol's (1967) observation on the negative correlation between the size of the service sector and growth. It is shown that trade improves welfare through the exploitation of comparative advantages but accelerates the shift toward services, slowing down the rate of growth. Trade can decrease welfare if manufacturing activities with learning-by-doing move abroad. In this case, some experience is lost and all countries lose. Copyright 1998 by Blackwell Publishing Ltd.
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Volume (Year): 6 (1998)
Issue (Month): 3 (August)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
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- Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
- Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
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