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

Carmen D. Álvarez-Albelo (), Antonio Manresa and Monica Pigem-Vigo ()
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Carmen D. Álvarez-Albelo: Departamento de Análisis Económico, Facultad de Ciencias Económicas, Universidad de La Laguna and CREB
Monica Pigem-Vigo: CREB, Universitat de Barcelona

No XREAP2009-06, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

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.

Keywords: international trade; stagnant economies; growth transmission; mechanisms of transmission. (search for similar items in EconPapers)
JEL-codes: F43 O33 O41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-06, Revised 2009-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2009-6.pdf First version, 2009 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2009-6.pdf Revised version, 2009 (application/pdf)

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