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Capital Accumulation And Convergence In A Small Open Economy

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  • PARTHA SEN

    (Faculty of Economics,South Asian University and Department of Economics, Delhi School of Economics, Delhi, India)

Abstract

Outward-oriented economies seem to grow faster than inward-looking ones. Does the literature on convergence have anything to say on this? In the dynamic Heckscher-Ohlin-Samuelson model, with factor-price equalization, there is no convergence of incomes. This is because with identical preferences and return to capital, irrespective of initial levels the growth rates of consumption are the same. In the Specific Factors model, there is factor price equalization in the long run, but incomes depend on endowments of non-accumulable factors. Different specifications for the intersectorally mobile factors have different implications for development (as well as convergence).

Suggested Citation

  • Partha Sen, 2012. "Capital Accumulation And Convergence In A Small Open Economy," Working papers 212, Centre for Development Economics, Delhi School of Economics.
  • Handle: RePEc:cde:cdewps:212
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    References listed on IDEAS

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    Cited by:

    1. Partha Sen & Koji Shimomura, 2017. "Convergence and Overtaking in a Dynamic two Country Model," Open Economies Review, Springer, vol. 28(1), pages 107-124, February.

    More about this item

    Keywords

    Convergence; Heckscher-Ohlin Model; Specific Factors Model; Land; Capital Accumulation.;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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