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Trade Patterns and Non-Scale Growth between Two Countries

  • Hiroaki Sasaki

This paper builds a two-country, two-sector (manufacturing and agriculture), non-scale growth model and investigates the relationship between trade patterns and the growth rate of per capita real consumption. If the population growth rate of the home country is higher than that of the foreign country, the following results are obtained. (1) Under autarky, the growth rate of per capita real consumption is higher in the home country than in the foreign country. (2) Under free trade, if the home country completely specializes in manufacturing and the foreign country asymptotically completely specializes in agriculture, then the growth rate of the foreign country is higher than that of the home country, though this trade pattern is not sustainable in the long run. (3) Under free trade, if the home country produces both goods and the foreign country asymptotically completely specializes in agriculture, then the growth rates of the home country and the foreign country are equal, and this trade pattern is sustainable in the long run.

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Paper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-12-006.

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Length: 26 pages
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:kue:dpaper:e-12-006
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  1. Hiroaki Sasaki, 2010. "Trade, Non-Scale Growth, and Uneven Development," Discussion papers e-10-002, Graduate School of Economics Project Center, Kyoto University.
  2. Felbermayr, Gabriel J., 2004. "Specialization on a Technologically Stagnant Sector Need Not Be Bad for Growth," Center for European, Governance and Economic Development Research Discussion Papers 24, University of Goettingen, Department of Economics.
  3. Hiroaki Sasaki, 2011. "Population growth and north-south uneven development," Oxford Economic Papers, Oxford University Press, vol. 63(2), pages 307-330, April.
  4. Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
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