RICH, POOR AND GROWTH-MIRACLE NATIONS: MULTIPLE EQUILIBRIA REVISITED

Lilia Maliar, Dmytro Kylymnyuk and Serguei Maliar
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Dmytro Kylymnyuk: Universidad de Alicante

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper presents a two-sector growth model of international trade that can account for the key features of the postwar world development experience. Two sectors represent the traditional primitive production and the modern sophisticated production. Due to increasing returns in the modern sector, the open-economy version of our model gives rise to three different equilibria: one in which the country produces only primitive goods and converges to a low-income steady state; another in which it produces both primitive and sophisticated goods and converges to the world-average steady state; and a third in which it specializes in the production of sophisticated goods and converges to a balanced growth path. We argue that the development experiences of poor, rich and growth-miracle countries are well described by these three equilibria.

Keywords: International trade; small-open economy; multiple equilibria; poverty trap; growth miracles; coordination proble (search for similar items in EconPapers)
JEL-codes: C00 F12 O14 O30 O41 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2004-10
New Economics Papers: this item is included in nep-dev, nep-dge and nep-int
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Citations: View citations in EconPapers (1)

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2004-39.pdf Fisrt version / Primera version, 2004 (application/pdf)

Related works:
Journal Article: Rich, Poor and Growth-Miracle Nations: Multiple Equilibria Revisited (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2004-39

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