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The international trade as the sole engine of growth for an economy

Author

Listed:
  • Carmen D. Álvarez-Albelo

    () (Departamento de Análisis Económico, Facultad de Ciencias Económicas, Universidad de La Laguna and CREB)

  • Antonio Manresa

    () (CREB, Universitat de Barcelona)

  • Monica Pigem-Vigo

    () (CREB, Universitat de Barcelona)

Abstract

Can international trade act as the sole engine of growth for an economy? If yes, what are the mechanisms through which trade operates in transmitting permanent growth? This paper answers these questions with two simple two-country models, in which only one country enjoys sustained growth in autarky. The models differ in the assumptions on technical change, which is either labour- or capital-augmenting. In both cases, the stagnant economy imports growth by trading. In the first model, growth is transmitted because of permanent increases in the trade volume. In the alternative framework, the stagnant economy imports sustained growth because its terms of trade permanently improve.

Suggested Citation

  • Carmen D. Álvarez-Albelo & Antonio Manresa & Monica Pigem-Vigo, 2009. "The international trade as the sole engine of growth for an economy," Working Papers XREAP2009-06, Xarxa de Referència en Economia Aplicada (XREAP), revised Jun 2009.
  • Handle: RePEc:xrp:wpaper:xreap2009-06
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    File URL: http://www.xreap.cat/RePEc/xrp/pdf/XREAP2009-6.pdf
    File Function: First version, 2009
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    File URL: http://www.xreap.cat/RePEc/xrp/pdf/XREAP2009-6.pdf
    File Function: Revised version, 2009
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    Cited by:

    1. Carmen D. Álvarez-Albelo & Antonio Manresa & Monica Pigem-Vigo, 2015. "Growing through trade: the role of foreign growth and domestic tariffs," Working Papers XREAP2015-04, Xarxa de Referència en Economia Aplicada (XREAP), revised Nov 2015.

    More about this item

    Keywords

    international trade; stagnant economies; growth transmission; mechanisms of transmission.;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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