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

  • Lilia Maliar

    ()

    (Universidad de Alicante)

  • Dmytro Kylymnyuk

    (Universidad de Alicante)

  • Serguei Maliar

    (Universidad de Alicante)

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.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2004-39.

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Length: 46 pages
Date of creation: Oct 2004
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2004-39
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