 Growth, Specialization, and Trade LiberalizationInternational Economic Review, 1997, vol. 38, issue 3, 565-85 Abstract: This paper examines a two-way interaction between trade liberalization and economic growth. Through increasing returns to specialization, international trade can increase world growth rates. But growth alters patterns of comparative advantage, changing the incentives to levy tariffs in a dynamic tariff game between governments. Two types of equilibria are analyzed. In a tariff war equilibrium, growth rates are low, tariffs are high and rising, and the ratio of exports to income, the trade ratio, is low and falls to zero asymptotically. In a trade liberalization equilibrium, growth rates are high, tariffs are low and falling, and the trade ratio is higher and is increasing over time. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. Date: 1997 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ier:iecrev:v:38:y:1997:i:3:p:565-85 Ordering information: This journal article can be ordered from Access Statistics for this article International Economic Review is currently edited by Harold L. Cole More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC. |
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