Is Agricultural Productivity Growth Good for Industrialization? Infrastructures and the Welfare Maximizing Tax Rate
This paper develops a dynamic Ricardian trade model that incorporates productive infrastructures into the manufacturing sector financed by tax. We investigate the relationship between the timing of opening trade and total welfare. We also compare the two kinds of total welfare: the total welfare that a country obtains by closing international trade until it has a comparative advantage in manufacturing and then engaging in free trade and the total welfare that the country obtains by specializing in agriculture according to the law of comparative advantage from the beginning. The main results are as follows: (1) there is the optimal tax rate maximizing the total welfare; (2) an increase in agricultural productivity can accelerate the timing of opening trade, which, however, does not necessarily improve the total welfare; and (3) the total welfare under specialization in manufacturing can be higher than that under specialization in agriculture depending on conditions.
|Date of creation:||11 Feb 2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kar-yiu Wong & Chong K. Yip, 1998.
"Industrialization, Economic Growth and International Trade,"
Discussion Papers in Economics at the University of Washington
0077, Department of Economics at the University of Washington.
- Wong, Kar-yiu & Yip, Chong K, 1999. "Industrialization, Economic Growth, and International Trade," Review of International Economics, Wiley Blackwell, vol. 7(3), pages 522-40, August.
- Kar-Yiu, Wong & Chong K. Yip, 1998. "Industrialization, Economic Growth, and International Trade," Departmental Working Papers _092, Chinese University of Hong Kong, Department of Economics.
- Kar-yiu Wong & Chong K. Yip, 1998. "Industrialization, Economic Growth and International Trade," Working Papers 0077, University of Washington, Department of Economics.
- Spilimbergo, Antonio, 2000. " Growth and Trade: The North Can Lose," Journal of Economic Growth, Springer, vol. 5(2), pages 131-46, June.
- Xiaobing Wang & Jenifer Piesse, 2013. "The Micro-Foundations Of Dual Economy Models," Manchester School, University of Manchester, vol. 81(1), pages 80-101, 01.
- Toru Kikuchi, 2004. "Agricultural Productivity, Business Services, and Comparative Advantage," Open Economies Review, Springer, vol. 15(4), pages 375-383, October.
- Redding, Stephen, 1999.
"Dynamic Comparative Advantage and the Welfare Effects of Trade,"
Oxford Economic Papers,
Oxford University Press, vol. 51(1), pages 15-39, January.
- Redding, S., 1997. "Dynamic Comparative Advantage and the Welfare Effects of Trade," Economics Papers 140, Economics Group, Nuffield College, University of Oxford.
- Barro, R.J., 1988.
"Government Spending In A Simple Model Of Endogenous Growth,"
RCER Working Papers
130, University of Rochester - Center for Economic Research (RCER).
- Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
- Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
- Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
- Matsuyama, Kiminori, 1992.
"Agricultural productivity, comparative advantage, and economic growth,"
Journal of Economic Theory,
Elsevier, vol. 58(2), pages 317-334, December.
- Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
- Leonid V. Azarnert, 2014.
"Agricultural Exports, Tariffs and Growth,"
CESifo Working Paper Series
4583, CESifo Group Munich.
- Jonathan Temple, 2005.
"Dual economy models: a primer for growth economists,"
Bristol Economics Discussion Papers
05/574, Department of Economics, University of Bristol, UK.
- Jonathan Temple, 2005. "Dual Economy Models: A Primer For Growth Economists," Manchester School, University of Manchester, vol. 73(4), pages 435-478, 07.
- Jing Jun Chang & Been-Lon Chen & Mei Hsu, 2006. "Agricultural Productivity and Economic Growth: Role of Tax Revenues and Infrastructures," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 891–914, April.
- Colin Kirkpatrick & Armando Barrientos, 2004. "The Lewis Model After 50 Years," Manchester School, University of Manchester, vol. 72(6), pages 679-690, December.
- Hiroaki Sasaki, 2008. "International Trade And Industrialization With Capital Accumulation And Skill Acquisition," Manchester School, University of Manchester, vol. 76(4), pages 464-486, 07.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:53606. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.