De-Industrialization and Trade

Antonio Spilimbergo

No 4014, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: Baumol (1967) showed that the rate of growth of an economy slows down if a sector has lower productivity than others and the demand between goods is inelastic. This paper points out that trade is equivalent to technological progress in the tradable sector. Therefore an open economy has higher income but lower growth than a closed economy. Moreover, the reallocation of activity from one country to another country can have a negative effect on welfare when there is country-specific learning by doing.

Date: 1995-11
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Related works:
Journal Article: Deindustrialization and Trade (1998)
Working Paper: De-industrialization and Trade (1995)
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