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Rich, Poor and Growth-Miracle Nations: Multiple Equilibria Revisited
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Dmytro Kylymnyuk
Published/Copyright:
August 1, 2007
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 traditional primitive production and 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 problem
Published Online: 2007-8-1
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Keywords for this article
international trade;
small-open economy;
multiple equilibria;
poverty trap;
growth miracles;
coordination problem
Articles in the same Issue
- Topics Article
- To Pool or to Aggregate? Tests with a Dynamic Panel Macroeconometric Model of Australian State Labor Markets
- Economic Growth: A Channel Decomposition Exercise
- Liquidity Effects, Variable Time Preference, and Optimal Monetary Policy
- Optimal Monetary Policy, Endogenous Sticky Prices, and Multiple Equilibria
- A Simple Wicksellian Macroeconomic Model
- Confidence-Enhanced Economic Growth
- A Positive Analysis of Targeted Employment Protection Legislation
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- Savers, Spenders and Fiscal Policy in a Small Open Economy
- Assessing Sign Restrictions
- Euro Area Inflation Differentials
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- The Arrow Effect under Competitive R&D
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