CAPITAL ACCUMULATION AND CONVERGENCE IN A SMALL OPEN ECONOMY

Partha Sen
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Partha Sen: Faculty of Economics,South Asian University and Department of Economics, Delhi School of Economics, Delhi, India

No 212, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: Outward-oriented economies seem to grow faster than inward-looking ones. Does the literature on convergence have anything to say on this? In the dynamic Heckscher-Ohlin-Samuelson model, with factor-price equalization, there is no convergence of incomes. This is because with identical preferences and return to capital, irrespective of initial levels the growth rates of consumption are the same. In the Specific Factors model, there is factor price equalization in the long run, but incomes depend on endowments of non-accumulable factors. Different specifications for the intersectorally mobile factors have different implications for development (as well as convergence).

Keywords: Convergence; Heckscher-Ohlin Model; Specific Factors Model; Land; Capital Accumulation. (search for similar items in EconPapers)
JEL-codes: F10 F11 F43 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-02
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Related works:
Journal Article: Capital Accumulation and Convergence in a Small Open Economy (2013)
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