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Dynamics, Economic Growth, and International Trade

Bjarne S. Jensen and Kar-yiu Wong, Editors

Publication Year: 1997

While endogenous growth theory has claimed success in modeling various factors of growth and providing an analysis of sustainable economic growth, most of the growth models in published work are for closed economies. The omission of international trade, which is often regarded as the engine of growth, greatly reduces their usefulness. The theory of international trade, on the other hand, is characterized by models that are mainly static. While interest in the dynamics of trade has been growing, there is still little work in this area. The success of the newly industrialized economies that have adopted trade-oriented policies suggests how limited present trade theory is in explaining and analyzing the growth of these economies. The work collected here serves to bridge the "old" growth theory and "new" growth theory; merge growth and trade theory; suggest new analysis and techniques of economic growth; and provide analysis of new issues related to growth and trade. The first chapter surveys endogenous growth and international trade and critically reviews the endogenous growth theory with a unified framework, covering the work on both closed and open economies. Three chapters examine the dynamics of some basic trade models; two chapters focus on growth and trade with endogenous accumulation of human and public capital; two chapters on economic growth, technological progress, and international trade; and two chapters on growth and international factor movements. Contributors include Eric W. Bond, Theo S. Eicher, Rolf F-re, Oded Galor, Shawna Grosskopf, Bjarne S. Jensen, Pantelis Kalaitzidakis, Shoukang Lin, Ngo Van Long, Kazuo Nishimura, Koji Shimomura, Kathleen Trask, Stephen J. Turnovsky, Pham Hoang Van, Henry Wan, Jr., Chunyan Wang, and Kar-yiu Wong. Bjarne S. Jensen is Associate Professor of Economics, Copenhagen Business School. Kar-yiu Wong is Professor of Economics, University of Washington, Seattle.

Published by: University of Michigan Press

Contents

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pp. vii-viii

List of Figures

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pp. ix-xi

List of Tables

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pp. xii-

Contributors

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pp. xiii-

Part I. Introduction

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1. Introduction

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pp. 3-9

This volume presents the new contributions of a number of economists on dynamics, economic growth, and international trade. It includes one survey on endogenous growth and international trade and nine chapters that provide new analysis and new results...

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2. Endogenous Growth and International Trade: A Survey

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pp. 11-74

Economists have long been interested in searching for the causes and effects of the growth of income and wealth of countries. Some earlier attempts to analyze economic growth with rigorous models appeared in the twenties and thirties, mainly characterized by the work of Ramsey (1928), Harrod (1939) and Domar (1946). While Ramsey is concerned about the maximization of intertemporal utility...

Part II. Dynamics of Basic Trade Models

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3. General Equilibrium Dynamics of Basic Trade Models for Growing Economies

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pp. 77-126

In the literature on the pure theory of trade, the two-factor, two-sector, two-country framework has provided a fundamental general equilibrium structure for static and comparative-static analyses of many issues related to factor allocation, output composition, relative prices, and trade patterns. Although the work on two-sector...

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4. Endogenous Growth, Trade, and Specialization under Variable Returns to Scale: The Case of a Small Open Economy

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pp. 127-150

The spectacular success of several East and South East Asian economies has sparked a great deal of interest in the search for a better understanding of mechanisms that propel growth. According to the World Bank, the GNP per capita of Hong Kong, adjusted for purchasing power parity, have overtaken that of Canada and Japan. On the other hand, many countries remain unindustrialized...

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5. Dynamic Foundations for the Factor Endowment Model of International Trade

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pp. 151-168

This chapter establishes dynamic micro economic foundations for the fundamental propositions of the influential model of international trade theory - the Heckscher-Ohlin model. It analyzes the long-run trade patterns and their implications for factor returns within a comprehensive dynamic general equilibrium model characterized by a two-country two-sector overlapping-generations world...

Part III. Growth and Trade with Endogenous Accumulation of Human or Public Capital

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6. Public and Private Capital in an Endogenously Growing Open Economy

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pp. 171-210

The impact of public investment on productive capacity and macroeconomic performance has recently begun to attract the attention of economists. Much of this research was stimulated by Aschauer's (1989a, 1989b) striking findings suggesting that in the United States public capital has a powerful impact on the productivity of private capital. Aschauer's results were controversial and...

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7. Trade and Growth with Endogenous Human and Physical Capital Accumulation

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pp. 211-240

The analysis of capital accumulation has been a central focus of growth theory, starting with the one sector growth model of Solow (1956). More recently, growth models have been enriched to consider the accumulation of both physical and human capital. This interest in human capital accumulation was spurred by two influential papers by Lucas (1988, 1993), who argued that human capital accumulation...

Part IV. Economic Growth, Technological Progress, and International Trade

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8. Efficiency and Productivity in Rich and Poor Countries

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pp. 243-263

The motivation for our work is based in part on several recent articles in The Economist concerning growth and income.1 Part of the discussion concerns new and old growth theory, including the debate over convergence. More specifically we are interested in looking at Mancur Olson's hypothesis that the persistence of low income...

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9. Interpreting East Asian Growth

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pp. 265-286

We study in this chapter the East Asian economies, in particular, the Newly Industrialized Economies (NIEs) of Korea, Taiwan, Hong Kong, and Singapore. These economies have attracted much attention both for their own sake and for the valuable implications embodied in their remarkable experiences. Their performances are subjects...

Part V. Dynamics, Economic Growth, and International Factor Movement

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10. Endogenous Growth and International Labor Migration: The Case of a Small, Emigration Economy

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pp. 289-336

The present chapter raises and analyzes two issues related to economic growth and international labor migration that so far have received very little attention in the literature. The first one is the relation between economic growth and international labor migration. This issue involves some very important questions to the government planners and economists: How may emigration affect the growth...

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11. The Human Capital Dimension to Foreign Direct Investment: Training, Adverse Selection, and Firm Location

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pp. 337-364

The development literature emphasizes technology transfers as a central aspect of take-off and convergence of growth rates. Arguably the most important channel of technology transfer is foreign direct investment (FDI). While theoretical models of FDI and firm location focus largely on technology and physical capital, recent empirical...


E-ISBN-13: 9780472026418
E-ISBN-10: 0472026410
Print-ISBN-13: 9780472109180
Print-ISBN-10: 0472109189

Page Count: 384
Illustrations: 58 figures, 3 tables
Publication Year: 1997

Series Title: Studies in International Economics