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Economic transformation, population growth and the long-run world income distribution

  • Chamon, Marcos
  • Kremer, Michael

We present and calibrate a model where trade with advanced economies spurs development, and trade opportunities depend on the relative population in advanced and developing countries. As developing countries become advanced, prospects improve for the remaining developing countries. If population growth differentials between developing and advanced economies are small, economic development accelerates over time. Otherwise, long-run global prosperity requires a sufficiently large initial population in advanced countries. More open countries develop faster, but more openness by all developing countries may only modestly increase their aggregate growth. China's development may hurt developing countries in the short-run, but improves their long-run prospects.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 79 (2009)
Issue (Month): 1 (September)
Pages: 20-30

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Handle: RePEc:eee:inecon:v:79:y:2009:i:1:p:20-30
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