Trade, Growth, and Technology Equalization

John Seater ()

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: Trade is shown to increase economic growth purely through comparative advantage without recourse to scale effects, technology transfer, research and development, or even international investment. The resulting growth rates are those that would result from technology transfer, even though no technology transfer actually occurs. A balanced growth rate exists, is identical for all countries and therefore the world, and is asymptotically stable if and only if each country has an absolute (not just comparative) advantage in something. When balanced growth does not exist, trade reduces but does not eliminate differences between countries’ growth rates. Trade therefore does not necessarily guarantee a stable world income distribution. The magnitude of trade's effect on growth depends on the goods imported, not those exported.

Keywords: trade; growth; technology equalization; comparative advantage; absolute advantage; world income distribution (search for similar items in EconPapers)
JEL-codes: F15 O4 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2005-06
New Economics Papers: this item is included in nep-dev and nep-int
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