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Rich and Poor Countries in Neoclassical Trade and Growth

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  • Deardorff, Alan V

Abstract

A neoclassical growth model provides an explanation for a "poverty trap", "club convergence", or "twin peaks", in terms of specialisation and international trade. The model has many countries with identical linearly homogeneous technologies for producing three goods using capital and labour. With diverse initial endowments, initial equilibrium has unequal factor prices and two diversification cones. With savings out of wages, following Galor (1996), there may easily be multiple steady states. Poor countries converge to a low steady state while rich countries converge to a high one, even though all share identical technological and behavioural parameters.

Suggested Citation

  • Deardorff, Alan V, 2001. "Rich and Poor Countries in Neoclassical Trade and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 277-294, April.
  • Handle: RePEc:ecj:econjl:v:111:y:2001:i:470:p:277-94
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    References listed on IDEAS

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    Cited by:

    1. Xuepeng Liu, 2009. "Trade and income convergence: Sorting out the causality," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(1), pages 169-195.
    2. Trejos, Alberto & Ferreira, Pedro Cavalcanti, 2008. "Trade in intermediate goods and total factor productivity," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 676, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    3. Chatterjee, Partha & Shukayev, Malik, 2012. "A stochastic dynamic model of trade and growth: Convergence and diversification," Journal of Economic Dynamics and Control, Elsevier, vol. 36(3), pages 416-432.
    4. Alejandro Cunat & Marco Maffezzoli, 2004. "Neoclassical Growth and Commodity Trade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(3), pages 707-736, July.
    5. Pedro Cavalcanti Ferreira & Alberto Trejos, 2011. "Gains from Trade and Measured Total Factor Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(3), pages 496-510, July.
    6. Alejandro Cunat & Marco Maffezzoli, 2003. "The Generalized Neoclassical Growth Model," Working Papers 231, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    7. Ingianni, Andrea, 2012. "Intra-European Union trade openness and new members’ output convergence: A time-series analysis," Economics Discussion Papers 2012-5, School of Economics, Kingston University London.
    8. Christiaans, Thomas, 2008. "International trade and industrialization in a non-scale model of economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 19(3), pages 221-236, September.
    9. Pedro Cavalcanti Ferreira & Alberto Trejos, 2008. "Trade in intermediate goods and total factor productivity," Working Papers 08_18, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
    10. Jonathan Conning & Michael Kevane, 2005. "Freedom, Servitude and Voluntary Contract," Economics Working Paper Archive at Hunter College 408, Hunter College Department of Economics.
    11. Raphaël Chiappini, 2016. "Do overseas investments create or replace trade? New insights from a macro-sectoral study on Japan," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(3), pages 403-425, June.
    12. Ventura, Jaume, 2005. "A Global View of Economic Growth," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 22, pages 1419-1497 Elsevier.
    13. Robin Winkler, 2013. "Did Nazis save more? Household saving and ideology in pre-war National Socialist Germany," Economics Series Working Papers 119, University of Oxford, Department of Economics.
    14. Bartkowska, Monika & Riedl, Aleksandra, 2012. "Regional convergence clubs in Europe: Identification and conditioning factors," Economic Modelling, Elsevier, vol. 29(1), pages 22-31.
    15. Raphaël Chiappini, 2012. "Un réexamen de la relation entre commerce et Investissement Direct à l'étranger (IDE) à partir d'un modèle en panel dynamique Le cas de l'Allemagne, la France et l'Italie," Working Papers hal-00744405, HAL.
    16. Park, Donghyun, 2003. "An empirical examination of income convergence in the Asia-Pacific region," Journal of Asian Economics, Elsevier, vol. 14(3), pages 497-502, June.
    17. Raphaël Chiappini & Yves Jégourel, 2014. "Futures Market Volatility, Exchange Rate Uncertainty and Cereals Exports: Empirical Evidence from France," GREDEG Working Papers 2014-34, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    18. Mark Rogers, 2003. "A Survey of Economic Growth," The Economic Record, The Economic Society of Australia, vol. 79(244), pages 112-135, March.
    19. Raphaël Chiappini, 2013. "Do Overseas investments create or replace trade? New insights from a macro-sectoral study on Japan," Working Papers hal-00854109, HAL.
    20. Raphaël Chiappini, 2012. "Un réexamen de la relation entre commerce et Investissement Direct à l’étranger (IDE) à partir d’un modèle en panel dynamique Le cas de l’Allemagne, la France et l’Italie," Larefi Working Papers 1204, Larefi, Université Bordeaux 4.
    21. Ranjan, Priya, 2003. "Trade induced convergence through human capital accumulation in credit-constrained economies," Journal of Development Economics, Elsevier, vol. 72(1), pages 139-162, October.

    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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