Finance and Competitiveness in Developing Countries

By José María Fanelli; Rohinton Medhora | Go to book overview

10

Trade specialization andeconomic growth1

Jaime Ros


1.Introduction

The central question addressed in this chapter is how the pattern of trade specialization can affect long-term economic growth performance. This issue has received little attention in theoretical analysis and empirical studies. Standard trade theory has been interested on the question of how growth - through the changing composition of factor endowment - affects comparative advantages and thus the trade pattern. It has had little to say, however, on the causal links we are interested here, i.e. those running from trade specialization to growth. Neither has modern growth theory paid much attention to this issue. Neoclassical growth theory focuses on the role of factor accumulation, i.e. investment rates in physical and human capital as well as labor force growth. Moreover, its assumption of a constant returns to scale technology leaves little room for economic structure to affect the growth rate. Recent endogenous growth models have brought increasing returns into growth theory but the level of aggregation assumed in these models has led them to focus on factors other than the pattern of specialization. Growth empirics, inspired by these two brands of growth theory, has at most looked (without much success) at how trade openness, rather than trade specialization, may affect differences in growth rates among countries. There is thus a theoretical as well as an empirical gap to fill in this important area.

All this is not to say that there has been complete neglect. In the old literature on trade and in new trade theory, there is a significant list of contributions that are all relevant to our topic - on infant industry protection, the Prebisch-Singer thesis on the terms of trade of primary products, immiserizing growth, and multi-sector growth models with different rates of learning in new trade theory. In looking at how the pattern of specialization can affect growth, a common feature of these contributions is that the pattern of specialization of an economy, as determined by comparative advantages associated with the current factor endowment or locked in by historical accident, may be different from the pattern of specialization that yields the largest long-term economic benefits. This may occur because the economy's static comparative advantage does not coincide with its dynamic comparative advantage in the presence of, for example, technological externalities due to learning by doing, or because the evolution of the terms of trade is such that the

-291-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Finance and Competitiveness in Developing Countries
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 366

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.