Growth and Interdependence

Abstract

Two of the most interesting facts of the postwar international growth experience are (1) the conditional convergence finding that, after controlling for measures of education and government policies, poor countries tend to grow faster than rich ones; and (2) a small group of export-oriented economies in East Asia have been able to grow at rates that are so high that they defy historical comparisons. This paper shows that it is possible to explain these facts by combining a weak form of the factor-price-equalization theorem of international trade with the Ramsey model of economic growth.᭧ 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Specialization on a technologically stagnant sector need not be bad for growth

“…It is, however, di¤erent to their model, in that it brings the empirically relevant case of trade in investment goods together with well documented evidence on embodied technical change. The model is also close to dynamic two-country, two-sector, two-factor Heckscher-Ohlin models, see for example Chen (1992) or Ventura (1997) and the references therein. However, these papers consider diversi…ed economies only and do not discuss the implications of embodied technical change in a free-trade environment.…”

Growing Through Trade: The Role of Foreign Growth and Domestic Tariffs

“…Based on this empirical evidence, we have explored how the possibility of growing through trade is affected by foreign growth and a domestic import tariff. To this aim, we have developed a two-country model based on Ventura's (1997), where a backward economy seeks to increase its long-run growth rate simple by trading with a faster growing partner. Our model involves neither international spillovers nor technology transfers, and trade impacts growth solely via the comparative advantage.…”

Aggregate Production Functions and Growth Economics

“…3 In practice, his points have been answered in other ways. An implication of the analysis in Ventura (1997) and Robertson (1999) is that two-sector models will feature less variation in the returns to capital, over time and space, than a closed economy Solow model. This is related to a standard result in simple 2 x 2 trade theory models, since the marginal product of capital will typically be independent of factor endowments while the economy remains incompletely specialized.…”