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North-South trade and the dynamics of the environment, Chapter 2.2


  • Chichilnisky, Graciela
  • Abraham, Ralph
  • Record, Ron


This paper develops a dynamic model of North-South trade in which environment plays an important role. Our model is based on Chichilnisky North-South model for the macroeconomic interaction between two sectors of the world economy. The latter was introduced in a static context. We introduce dynamics in the original North-South model by allowing endogenous accumulation of capital. As a second extension of [1], we introduce here a variable which represents the system of property rights on the environmental asset which is used as an input to production. This could represent, for example, the property rights on forests from which wood is extracted to be used as an input to the production of traded goods or the property rights on water which is similarly used, perhaps for agricultural goods for export. The paper explains mathematically and through simulations the dynamics of a two-region world. There are two produced goods and two inputs to production. We show that as we vary the property rights of the environment the dynamics of the system changes. The less well defined are the property rights, the more chaotic are the model's dynamics.

Suggested Citation

  • Chichilnisky, Graciela & Abraham, Ralph & Record, Ron, 1998. "North-South trade and the dynamics of the environment, Chapter 2.2," MPRA Paper 8818, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:8818

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    References listed on IDEAS

    1. Chichilnisky,Graciela & Heal,Geoffrey M., 2005. "The Evolving International Economy," Cambridge Books, Cambridge University Press, number 9780521310017.
    2. Chichilnisky, Graciela, 1993. "North-South trade and the dynamics of renewable resources," Structural Change and Economic Dynamics, Elsevier, vol. 4(2), pages 219-248, December.
    3. Graciela Chichilnisky & Geoffrey Heal, 1993. "Global Environmental Risks," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 65-86, Fall.
    4. Chichilnisky, Graciela, 1985. "International trade in resources: a general equilibrium analysis," MPRA Paper 8356, University Library of Munich, Germany.
    5. Chichilnisky, Graciela, 1981. "Terms of trade and domestic distribution : Export-led growth with abundant labour," Journal of Development Economics, Elsevier, vol. 8(2), pages 163-192, April.
    6. Chichilnisky, Graciela, 1986. "A general equilibrium theory of North-South trade," MPRA Paper 8810, University Library of Munich, Germany.
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    More about this item


    north-south trade; property rights; environmental assets;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth


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