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Structural change in a Ricardian world economy: The role of extensive rent

Giuseppe Freni (), Neri Salvadori () and Rodolfo Signorino ()

Structural Change and Economic Dynamics, 2019, vol. 49, issue C, 277-282

Abstract: We study an implication of the Ricardian theory of differential extensive rent in a free trade regime. To this effect we develop a Ricardian two country two commodity open economy model. We assume that, unlike labour, land is heterogeneous both within and across countries and that the ratio of high to low quality land is different among the trading countries. By means of a numerical example we show that as the process of worldwide capital accumulation (and population growth) proceeds an industrial country may find it convenient to increase its domestic corn production and even reverse completely the pattern of its imports and exports.

Keywords: Capital accumulation; International trade; Structural change; Ricardian economics; Heckscher-Ohlin model (search for similar items in EconPapers)
JEL-codes: B12 B27 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.strueco.2018.10.002

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