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

  • 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)

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.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 496.

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Length: 45 pages
Date of creation: 01 Feb 1998
Date of revision:
Handle: RePEc:hhs:iuiwop:0496
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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  19. Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 577-98, August.
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