Neoclassical Growth, Manufacturing Agglomeration and Terms of Trade

Dieter Urban

No 136, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: This paper presents an integrated view of economic growth, development traps, and economic geography. We explain why there is income convergence among some countries (neoclassical regime) and income divergence among others (poverty trap regime). Income convergence (divergence) and manufacturing industry diffusion (agglomeration) are re-enforcing each other in a cumulative process. Moreover, trade openness may trigger a catch-up process of an economy that is stuck in a \"poverty trap\". This catch-up is characterized by an increase in the investment-to-GDP ratio and an improvement of the terms of trade. A new dynamic welfare gain of trade liberalization is identified, which is likely to be large.

Keywords: agglomeration; complementarities; convergence; dynamic trade theory; dynamic welfare gains of trade; poverty trap; terms of trade; trade liberalization (search for similar items in EconPapers)
JEL-codes: F12 O41 (search for similar items in EconPapers)
Date: 2000-03-01
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.dagliano.unimi.it/media/WP2000_136.pdf (application/pdf)

Related works:
Journal Article: Neoclassical Growth, Manufacturing Agglomeration, and Terms of Trade (2007)
Working Paper: Neoclassical growth, manufacturing agglomeration, and terms of trade (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:136

Access Statistics for this paper

More papers in Development Working Papers from Centro Studi Luca d'Agliano, University of Milano Contact information at EDIRC.
Bibliographic data for series maintained by Chiara Elli ().