Path Interdependence Among Early and Late Bloomers in a Dynamic Heckscher-Ohlin Model

Beatriz Gaitan () and Terry Roe

No 7183, Bulletins from University of Minnesota, Economic Development Center

Abstract: The closed economy neoclassical growth model predicts convergence to a capital stock level that is independent of its initial level, suggesting that discrepancies in per capita income among the world’s economies should largely disappear in the long-run. This paper shows that international trade among countries differing only in their level of initial capital is sufficient to generate long-run income differences across countries. The long-run level of capital of the country most initially endowed with capital is shown to exceed the level of capital otherwise obtained in autarchy while the country least endowed converges to a capital stock lower than would otherwise be obtained in autarchy.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 34
Date: 2007
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:umedbu:7183

DOI: 10.22004/ag.econ.7183

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