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Trade, Growth, and Technology Equalization

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  • John J. Seater

Abstract

Trade is shown to increase economic growth purely through comparative advantage without recourse to scale effects, technology transfer, research and development, or even international investment. The resulting growth rates are those that would result from technology transfer, even though no technology transfer actually occurs. A balanced growth rate exists, is identical for all countries and therefore the world, and is asymptotically stable if and only if each country has an absolute (not just comparative) advantage in something. When balanced growth does not exist, trade reduces but does not eliminate differences between countries’ growth rates. Trade therefore does not necessarily guarantee a stable world income distribution. The magnitude of trade's effect on growth depends on the goods imported, not those exported.

Suggested Citation

  • John J. Seater, 2005. "Trade, Growth, and Technology Equalization," DEGIT Conference Papers c010_008, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c010_008
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    File URL: http://degit.sam.sdu.dk/papers/degit_10/C010_008.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    trade; growth; technology equalization; comparative advantage; absolute advantage; world income distribution;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • F15 - International Economics - - Trade - - - Economic Integration

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