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Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs

In: Firms and Workers in a Globalized World Larger Markets, Tougher Competition

Author

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  • RICHARD E. BALDWIN
  • PHILIPPE MARTIN
  • GIANMARCO I. P. OTTAVIANO

Abstract

This article formalizes the theoretical interconnections among four post–industrial revolution phenomena—the industrialization and growth take-off of rich northern nations, massive global income divergence, and rapid trade expansion. In stages-of-growth model, the four phenomena are jointly endogenous and are triggered by falling trade costs. In the first growth stage (with high trade costs) industry is dispersed internationally, and growth is low. In the second (medium trade costs), the North industrializes rapidly, growth take-off, and the South diverges. In the third (low trade costs), high growth and global divergence become self-sustaining. In the fourth stage, when the cases of “trading” ideas decreases, the South quickly industrializes and converges.

Suggested Citation

  • Richard E. Baldwin & Philippe Martin & Gianmarco I. P. Ottaviano, 2021. "Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 2, pages 25-57, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789811233395_0002
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    More about this item

    Keywords

    Allocative Efficiency; Immigration; Inequality; Innovation; International Competition; International Trade; Macroeconomic Effects of Globalization; New Economic Geography; New Trade Theory; Offshoring; Regional Decline; Regional Growth; Territories; Waves of Globalization; Winners and Losers from Globalization; Borders; Creative Destruction; Cultural Diversity; Economic Geography; Economic Growth; Firm Heterogeneity; Firms and Workers; Globalization;
    All these keywords.

    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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