Growth and International Trade: A Heckscher-Ohlin Aproach

Jean-Pierre Laffargue ()
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Jean-Pierre Laffargue: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We combine in a unified model the Ramsey exogenous and the Rebelo endogenous growth models with the Heckscher-Ohlin trade one. We show that openness to trade induces the (conditional) equalization of factor prices across countries, but is insufficient to cause the convergence of their outputs and stocks of capital per capita: a poor country may (under conditions) grow faster than the rich ones, but it permanently remains poorer. However, openness to trade plus a high preference for the future (higher than in the rich countries contrarily to what was assumed for the previous result) allows a poor country to grow fast and eventually to catch up with the rich ones. This result can explain the fast development of Eastern Asia since the 1960s or 1980s.

Keywords: Heckscher-Ohlin model; Ramsey growth model; AK growth model; convergence; hysteresis (search for similar items in EconPapers)
Date: 2019-05
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Published in Yin-Wong Cheung and Bharat R. Hazari. Surveys of International Trade, World Scientific, pp.740, 2019, 978-981-3238-59-6

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-02400533

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