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

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Listed:
  • Baldwin, Richard E.

    (Graduate Institute of International Studies, Geneva)

  • Martin, Philippe

    (Graduate Institute of International Studies, Geneva, and CERAS, Paris)

  • Ottaviano, Gianmarco I.P.

    (University of Bologna and Louvain-la-Neuve)

Abstract

This paper takes a step towards formalizing 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. Specifically, we present a stages-of growth model in which the four phenomena are jointly endogenous and all are trigged by a gradual fall in the cost of doing business internationally. In the first stage, while trade costs are high, industry is dispersed and growth is low. In the second stage, the north industrializes rapidly, growth takes off and the south diverges. In the third stage, high growth becomes self sustaining. The model shows under which conditions, in a fourth stage, the south can quickly industrialize and converge.

Suggested Citation

  • Baldwin, Richard E. & Martin, Philippe & Ottaviano, Gianmarco I.P., 1998. "Global Income Divergence, Trade and Industrialisation: The Geography of Growth Take-Offs," Working Paper Series 496, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0496
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    More about this item

    Keywords

    Growth Take-Off; Industrial Revolution; Economic Geography; Endogenous Growth; Trade and Development;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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