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Paths of development for early- and late-bloomers in a dynamic Heckscher-Ohlin model

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  • Andrew Atkeson
  • Patrick J. Kehoe

Abstract

We show that in a dynamic Heckscher-Ohlin model the timing of a country?s development relative to the rest of the world affects the path of the country?s development. A country that begins the development process later than most of the rest of the world?a late-bloomer?ends up with a permanently lower level of income than the early-blooming countries that developed earlier. This is true even though the late-bloomer has the same preferences, technology, and initial capital stock that the early-bloomers had when they started the process of development. This result stands in stark contrast to that of the standard one-sector growth model in which identical countries converge to a unique steady state, regardless of when they start to develop.

Suggested Citation

  • Andrew Atkeson & Patrick J. Kehoe, 2000. "Paths of development for early- and late-bloomers in a dynamic Heckscher-Ohlin model," Staff Report 256, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:256
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    References listed on IDEAS

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