Developing Countries Growth and Developed Country Response
This paper makes a theoretical argument that growth in developing countries is likely to worsen the income distribution in developed countries and lead to a protectionist response that undermines the incentives for developing country growth. The model for this purpose is the two-cone version of the Heckscher-Ohlin (HO) trade model, in which countries have different factor prices even with free trade and in which they produce mostly different groups of goods. In that model, unlike the HO model with factor price equalization, growth by the poor country expands the output of its capital-intensive good, which is also the labor-intensive good of the other country. Regardless of whether factors are mobile or immobile across sectors, this reduces the real wages of factors that are either intensive or specific in the labor-intensive sector of the rich country. The paper argues that this will then lead to the rich country restricting trade. This in turn will lower the return to capital in the poor country and reduce the incentive for further growth.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||2000|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://fordschool.umich.edu/rsie/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:mie:wpaper:462. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (FSPP Webmaster)
If references are entirely missing, you can add them using this form.