Per Capita Income Convergence and the Role of International Trade

Matthew J. Slaughter

No 5897, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The recent literature on cross-country convergence of per capita income has largely ignored international trade. The reason might be perspective. Most convergence papers frame the analysis in a `Solow world' in which countries exist independent of one another. But most international trade economists have a very different perspective of a world in which countries exchange goods, factors, and ideas. The goal of this paper is to sketch out some basic relationships between per capita income convergence and international trade. First, I briefly summarize a few interesting recent papers which have linked income convergence to trade. Their common inference is that for countries which are both somehow linked by trade and converging, trade helps cause the convergence. Second, I critique these papers in light of some simple accounting and trade theory. The key point here is that countries trading is not sufficient proof that trade helps cause per capita income convergence. Finally, I give two examples applying some of these ideas to real-world data. The basic point of the paper is that more work is needed to document carefully both the exact mechanisms by which trade helps convergence and the relative contribution of trade and non-trade factors.

JEL-codes: F1 O4 (search for similar items in EconPapers)
Date: 1997-01
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (53)

Published as American Economic Review (May 1997): 194-199.

Downloads: (external link)
http://www.nber.org/papers/w5897.pdf (application/pdf)

Related works:
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:nbr:nberwo:5897

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w5897

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).