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International convergence and local divergence

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  • Adolfo Cristobal-Campoamor

Abstract

This paper presents an East-West endogenous-growth model that reproduces recent stylized facts applicable to the trade liberalization process of many developing countries: convergence with the rest of the world, higher internal divergence, increasing spatial concentration of economic activity and higher growth rates. We claim that the ongoing reduction of manufacturing trade costs may generate a net inflow of global demand towards the industrialized cores of developing countries. This will induce a reallocation of labor from traditional to modern sectors. In turn, such a sectoral shift may enlarge the catch-up (imitation) potential of developing countries and raise global growth rates, due to Grossman and Helpman's complementarity between imitative and innovative activities. Although advanced economies may become relatively worse off, the effect on growth rates may allow them to gain in absolute terms.
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  • Adolfo Cristobal-Campoamor, 2009. "International convergence and local divergence," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(2), pages 527-558, June.
  • Handle: RePEc:spr:anresc:v:43:y:2009:i:2:p:527-558
    DOI: 10.1007/s00168-008-0230-2
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    Cited by:

    1. Cristobal Campoamor, Adolfo, 2015. "On Endogenous Product Cycles under Costly Trade," MPRA Paper 67289, University Library of Munich, Germany.

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    More about this item

    Keywords

    R11; F43;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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