Convergence, Divergence and Changing Trade Patterns: Theoretical Inquiries into the Role of Preferences, Factor Accumulation, Technological Change and ... (International Economics and Institutions) - Softcover

Wälde, Klaus

Softcover

ISBN 10: 3790808784 ISBN 13: 9783790808780

Publisher: Physica, 1995

Synopsis

1. Introduction and overview Until still few years ago, economic growth theory (going back to Solow, 1956; for an introduction cf. Burmeister and Dobell, 1970) predicted convergence of both growth rates and level of per capita income of economies which share identical preferences, technologies and same population growth rates, independently of initial conditions. Countries with a low capital stock grow faster than those with a higher capital stock, until, in the long-run, they all converge to a common constant growth rate. This prediction is due to the way how growth is "explained" in models of this kind. Growth of output per capita resulted, in the simplest model, from an exogenous growth oflabour productivity (see e. g. Sala-i-Martin, 1990; Grossman and Helpman, 1991a, ch. 2). Si!1ce this increase of productivity is exogenously given, the model itselfdoes not give any explanation ofits source. The prediction ofconvergence ofgrowth rates, itself, is very doubtful and observations show, that on an international level either convergence is not given at all, or that it takes a very long time. The literature of the "new" theory of growth provides a rich variety of models whose theoretical implications range from divergence to convergence and thus offers much better working tools in order to analyze real world observations. These models (starting with Romer, 1986 and Lucas, 1988) explain growth of GNP or per capita income from within the model by includingexternal effects such as a public stock ofknowledge capital (e. g.

About this title

Product Description

This study constitutes a theoretical inquiry into the reasons for convergence, divergence and, in a trade-theoretic perspective, for a reversal of trade patterns. It describes various mechanisms determining factor rewards and the change of trade patterns of growing economies. Special attention is paid to the effects of internationally differing preferences, unequal factor accumulation, technological change and government intervention. The chapters are in the tradition of the "new" growth and trade theory and elaborate novel results, especially with respect to factor rewards, convergence and trade patterns. It also contains appendices to the individual chapters deriving the results in the main text in an explicit and informative manner. The central motivation of this book is to theoretically determine reasons of changing trade patterns. Due to the close relationship of trade pattern reversal to convergence and factor price equalization, these issues are equally and thoroughly covered. The context is provided by endogenously growing economies embedded in a two-country world.

Edition details

• Publisher: Physica
• Publication date: 1995
• Language: English
• ISBN 10: 3790808784
• ISBN 13: 9783790808780
• Binding: Paperback
• Edition number: 1
• Number of pages: 160