Terms of trade, economic growth, and trade patterns: A small open-economy case

Research output: Contribution to journalArticle

20 Citations (Scopus)

Abstract

By incorporating human capital accumulation into a dynamic trade model, we examine the relationship between the growth rate and the specialization pattern of a growing economy. We found that as long as its autarky price differs from the world price, a small open-economy eventually specializes completely. Furthermore, the impact of the terms of trade on the growth rate depends on the trade pattern. Specifically, if a country specializes in a capital commodity, the growth rate is unaffected by the terms of trade. If it specializes in a consumption commodity, its growth rate is significantly influenced by the terms of trade. (C) 2000 Elsevier Science B.V. All rights reserved.

Original languageEnglish
Pages (from-to)169-181
Number of pages13
JournalJournal of International Economics
Volume52
Issue number1
DOIs
Publication statusPublished - 2000 Oct 4

Keywords

  • Endogenous growth
  • Terms of trade
  • Trade pattern

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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