RICH AND POOR COUNTRIES IN NEOCLASSICAL TRADE AND GROWTH

Alan Deardorff

Chapter 25 in Comparative Advantage, Growth, and the Gains from Trade and Globalization:A Festschrift in Honor of Alan V Deardorff, 2011, pp 295-313 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractA neoclassical growth model provides an explanation for a ‘poverty trap’, ‘club convergence’, or ‘twin peaks’, in terms of specialisation and international trade. The model has many countries with identical linearly homogeneous technologies for producing three goods using capital and labour. With diverse initial endowments, initial equilibrium has unequal factor prices and two diversification cones. With savings out of wages, following Galor (1996), there may easily be multiple steady states. Poor countries converge to a low steady state while rich countries converge to a high one, even though all share identical technological and behavioural parameters.

Keywords: Comparative Advantage; Trade And Growth; Globalization; Computational Modeling; Trade Policy Analysis (search for similar items in EconPapers)
Date: 2011
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Related works:
Journal Article: Rich and Poor Countries in Neoclassical Trade and Growth (2001)
Working Paper: Rich and Poor Countries in Neoclassical Trade and Growth (1997)
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