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Globalization, Capital Accumulation, and Terms of Trade

In: Growth and International Trade

Author

Listed:
  • Karl Farmer

    (University of Graz)

  • Matthias Schelnast

    (University of Graz)

Abstract

This chapter is devoted to developing elements of an economic theory of globalization. At the beginning different aspects of the globalization of markets and production are considered and the main causes of the globalization process since the early 1970s are enumerated. To entangle the economic consequences of two of these main causes a comparative static analysis is used first. Since the integration of populous developing countries into the world market economy changes their factor-proportions, the simultaneous dynamics of region-specific factor proportions and terms of trade are analyzed in an intertemporal equilibrium of the Heckscher-Ohlin two-country model. In view of rather high savings rates of Asian economies a terms-of-trade improvement for these emerging economies can be foreseen. To check this rather optimistic long-run result Krugman and Venables’ (Quartely Journal of Economics, 110, 857–880, 1995) medium-run core-periphery globalization model is finally analyzed.

Suggested Citation

  • Karl Farmer & Matthias Schelnast, 2013. "Globalization, Capital Accumulation, and Terms of Trade," Springer Texts in Business and Economics, in: Growth and International Trade, edition 127, chapter 12, pages 259-277, Springer.
    • Handle: RePEc:spr:sptchp:978-3-642-33669-0_12
    DOI: 10.1007/978-3-642-33669-0_12
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