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Trade, Southern Integration, and Uneven Development

Author

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  • Trofimov, Georgi

    (The Institute for Financial Studies)

Abstract

The paper demonstrates how trade between developing countries can cause the divergence of long-run growth among these countries. The model describes two symmetric countries trading with each other and the industrial rest of the world. Bilateral trade occurs at any moment if the countries have different numbers of intermediate varieties. The country with a larger number produces more manufactured goods than the other country does. In the bilateral trade the advanced country exports manufactures and imports basic goods and can develop the comparative advantage over the other country. The model demonstrates that Southern integration leads to uneven development paths if there is a high complementarity between intermediate inputs.

Suggested Citation

  • Trofimov, Georgi, 1997. "Trade, Southern Integration, and Uneven Development," Working Paper Series 488, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0488
    as

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    More about this item

    Keywords

    Trade; Intermediate inputs; Multiple equilibria;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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