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Rich, Poor And Growth-Miracle Nations: Multiple Equilibria Revisited

Author

Listed:
  • Lilia Maliar

    () (Universidad de Alicante)

  • Dmytro Kylymnyuk

    (Universidad de Alicante)

  • Serguei Maliar

    (Universidad de Alicante)

Abstract

This paper presents a two-sector growth model of international trade that can account for the key features of the postwar world development experience. Two sectors represent the traditional primitive production and the modern sophisticated production. Due to increasing returns in the modern sector, the open-economy version of our model gives rise to three different equilibria: one in which the country produces only primitive goods and converges to a low-income steady state; another in which it produces both primitive and sophisticated goods and converges to the world-average steady state; and a third in which it specializes in the production of sophisticated goods and converges to a balanced growth path. We argue that the development experiences of poor, rich and growth-miracle countries are well described by these three equilibria.

Suggested Citation

  • Lilia Maliar & Dmytro Kylymnyuk & Serguei Maliar, 2004. "Rich, Poor And Growth-Miracle Nations: Multiple Equilibria Revisited," Working Papers. Serie AD 2004-39, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2004-39
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Bryan Graham & Jonathan Temple, 2006. "Rich Nations, Poor Nations: How Much Can Multiple Equilibria Explain?," Journal of Economic Growth, Springer, vol. 11(1), pages 5-41, March.
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    6. Thorvaldur Gylfason & Gylfi Zoega, 2006. "Natural Resources and Economic Growth: The Role of Investment," The World Economy, Wiley Blackwell, vol. 29(8), pages 1091-1115, August.
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    10. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1999. "A Mixed Blessing," Macroeconomic Dynamics, Cambridge University Press, vol. 3(02), pages 204-225, June.
    11. Nancy L. Stokey, 1991. "Human Capital, Product Quality, and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 587-616.
    12. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-1026, October.
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    17. Choi, Jai-Young & Yu, Eden S H, 2002. "External Economies in the International Trade Theory: A Survey," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 708-728, November.
    18. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
    19. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Roland Eisen, 2008. "On Growth and Income Distribution in a Globalizing World," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 0(2), pages 33-46, July.
    2. Dmytro Kylymnyuk & Lilia Maliar & Serguei Maliar, 2007. "A model of unbalanced sectorial growth with application to transition economies," Economic Change and Restructuring, Springer, vol. 40(4), pages 309-325, December.

    More about this item

    Keywords

    International trade; small-open economy; multiple equilibria; poverty trap; growth miracles; coordination proble;

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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