Productivity, Demand and the Home Market Effect

Iader Giraldo and Fernando Jaramillo ()

No 14447, Documentos de Trabajo from Universidad del Rosario

Abstract: The causality between international trade and industrialization is still ambiguous. We consider a model of international trade with the Home Market Effect - with differences in income and productivity between sectors and between countries - in order to identify additional channels for determining the effects of international trade on industrialization. Introducing non-homothetic preferences and differences in productivity aids in the interpretation of any apparent paradoxes within international trade, such as the commercial relations between more populated countries like China and India and large economies such as the U.S. Population size, demand composition and productivity levels constitute the three main channels for determining the effects of international trade. Interactions among these channels define the results obtained in terms of industrialization, while welfare levels are always higher in relation to autarky.

Keywords: International Trade; Non-homothetic Preferences; Home Market Effect; Monopo-listic Competition. (search for similar items in EconPapers)
JEL-codes: F10 F12 F17 (search for similar items in EconPapers)
Pages: 36
Date: 2016-04-15
New Economics Papers: this item is included in nep-int
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http://repository.urosario.edu.co/bitstream/id/72290/dt186.pdf1.pdf

Related works:
Journal Article: Productivity, Demand, and the Home Market Effect (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000092:014447

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