Falling Behind and Catching Up in a Model of North-South Trade |
| |
| Authors: | John T Durkin Jr |
| |
| Institution: | Wayne State University, Detroit, MI 48202. Tel: 313-577-2693, Fax: 313-577-0149, Email . Previous versions of this paper have been presented at the Midwest International Economics Meetings in Lexington, KY and seminars at Wayne State University and the University of Michigan. The author would like to thank Baraba Craig, Ron Jones, Alan Deardorff, Bob Stem and two referees for their helpful comments. |
| |
| Abstract: | This paper analyzes a formal, dynamic model of the center-periphery problem. The model features falling relative demand for agricultural goods, a higher rate of technical change in manufacturing, and a quality-differentiated manufactured good. Income differences imply a potential for intra-industry trade, while technical change generates product cycle type results. The main insight is that a closing of the North-South technology gap does not necessarily imply catching up, because of the falling relative demand for agricultural goods. The South catches up only if it exports lower-quality varieties of the manufactured good and closes the technology gap. |
| |
| Keywords: | |
|
|
