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North-South Asymmetry in Returns to Scale, Uneven Development, and the Population Puzzle

  • Hiroaki Sasaki

This paper develops a model of North-South trade and economic development to analyze how an increase in the growth rate of population affects the growth rate of real income per capita. We assume that the North is characterized by an increasing-returns-to-scale technology while the South is characterized by a decreasing-returns-to-scale technology. The main results are as follows: (i) an increase in the growth rate of population in the South decreases the growth rate of its own income per capita; (ii) a rise in the growth rate of population in the North either increases or decreases the growth rate of its own income per capita depending on conditions; (iii) population growth in one country raises the growth rate of income per capita in the other country; and (iv) even the decreasing-returns South can experience a positive growth rate of income per capita if a continuous improvement in the terms of trade is larger than a threshold value.

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File URL: http://hdl.handle.net/10097/55391
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File URL: http://ir.library.tohoku.ac.jp/re/bitstream/10097/55391/1/terg238.pdf
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Paper provided by Graduate School of Economics and Management, Tohoku University in its series TERG Discussion Papers with number 238.

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Length: 24 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:toh:tergaa:238
Contact details of provider: Postal: Kawauchi, Aoba-ku, Sendai 980-8476
Web page: http://www.econ.tohoku.ac.jp/econ/english/index.html
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  1. Findlay, Ronald, 1980. "The Terms of Trade and Equilibrium Growth in the World Economy," American Economic Review, American Economic Association, vol. 70(3), pages 291-99, June.
  2. Lutz G. Arnold, 2006. "The Dynamics of the Jones R&D Growth Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(1), pages 143-152, January.
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  6. Eicher, Theo S & Turnovsky, Stephen J, 1999. " Convergence in a Two-Sector Nonscale Growth Model," Journal of Economic Growth, Springer, vol. 4(4), pages 413-28, December.
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  9. Darity, William A, Jr, 1990. "The Fundamental Determinants of the Terms of Trade Reconsidered: Long-run and Long-period Equilibrium," American Economic Review, American Economic Association, vol. 80(4), pages 816-27, September.
  10. Molana, Hassan & Vines, David, 1988. "North-South Growth and the Terms of Trade," CEPR Discussion Papers 248, C.E.P.R. Discussion Papers.
  11. Eicher, Theo S. & Turnovsky, Stephen J., 2001. "Transitional dynamics in a two-sector non-scale growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 25(1-2), pages 85-113, January.
  12. Osang, Thomas & Pereira, Alfredo, 1997. "Savings, Volume of Trade, and Growth," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 310-23, August.
  13. Sarkar, Prabirjit, 1997. "Growth and Terms of Trade: A North-South Macroeconomic Framework," Journal of Macroeconomics, Elsevier, vol. 19(1), pages 117-133, January.
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  15. Carmen Dolores �lvarez-Albelo & Fernando Perera-Tallo, 2008. "The Transmission of Sustained Growth through the Terms of Trade in an Endogenous Growth Model," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 386-396, 05.
  16. Dutt, Amitava Krishna, 1992. "A Kaldorian Model of Growth and Development Revisited: Comment," Oxford Economic Papers, Oxford University Press, vol. 44(1), pages 156-68, January.
  17. 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.
  18. Dutt, Amitava Krishna, 1996. "Southern Primary Exports, Technological Change and Uneven Development," Cambridge Journal of Economics, Oxford University Press, vol. 20(1), pages 73-89, January.
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