Diffusion of Countries Growth Through Specialization and Trade of Intermediate Inputs

Antonio Manresa and Monica Pigem
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Monica Pigem: Universitat de Barcelona and CREB

No 1119, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: The purpose of this paper is to contribute from a theoretical point of view to analyze the influence that trade between countries may have to enhance the growing possibilities of the world. We ask ourselves if it is possible to transmit from one country to another its sustained growth rate through trade. The answer that we found is that indeed it is possible when they trade in intermediate goods inputs. Our analysis identify a new element as a potential engine for one country growth, that is trading, which is not related to the total factor productivity of that country, but to some other trading partner's factor productivity. Hence we may need to consider trading relations among countries to explain the influence of some countries growth rates, say the leader countries, on some others countries development, which do not experience productivity gains in their factors of production. We analyze this question in the framework of the Ventura's (1997) model.

Date: 2000-08-01
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