scholarly journals Does Preferential Trade Benefit Poor Countries? A General Equilibrium Assessment with Nonhomothetic Preferences

2015 ◽  
Vol 23 (2) ◽  
pp. 239-270 ◽  
Author(s):  
Joachim Stibora ◽  
Albert de Vaal
Keyword(s):  
General Equilibrium ◽  
Preferential Trade ◽  
Poor Countries ◽  
Nonhomothetic Preferences

Engel's Law in the Global Economy: Demand‐Induced Patterns of Structural Change, Innovation, and Trade

Econometrica ◽  
2019 ◽  
Vol 87 (2) ◽  
pp. 497-528 ◽  
Author(s):  
Kiminori Matsuyama
Keyword(s):  
Structural Change ◽  
Global Economy ◽  
Income Elasticity ◽  
Value Added ◽  
Productivity Change ◽  
Poor Countries ◽  
Product Cycles ◽  
Directed Technical Change ◽  
Nonhomothetic Preferences ◽  
Demand Composition

Endogenous demand composition across sectors due to income elasticity differences, or Engel's Law for brevity, affects (i) sectoral compositions in employment and in value‐added, (ii) variations in innovation rates and in productivity change across sectors, (iii) intersectoral patterns of trade across countries, and (iv) product cycles from rich to poor countries. Using a two‐country model of directed technical change with a continuum of sectors under nonhomothetic preferences, which is rich enough to capture all these effects as well as their interactions, this paper offers a unifying perspective on how economic growth and globalization affect the patterns of structural change, innovation, and trade across countries and across sectors in the presence of Engel's Law. Among the main messages is that globalization amplifies, instead of reducing, the power of endogenous domestic demand composition differences as a driver of structural change.

scholarly journals The Missing Food Problem: Trade, Agriculture, and International Productivity Differences

2015 ◽  
Vol 7 (3) ◽  
pp. 226-258 ◽  
Author(s):  
Trevor Tombe
Keyword(s):  
Labor Market ◽  
Labor Markets ◽  
Open Economy ◽  
Trade Costs ◽  
Trade Flows ◽  
Poor Countries ◽  
Food Problem ◽  
Nonhomothetic Preferences ◽  
Negative Effect ◽  
High Employment

Agriculture in poor countries has low productivity, high employment, and negligible trade flows relative to other sectors. These facts motivate a multisector, open-economy view of international productivity differences. With a quantitative multicountry model featuring nonhomothetic preferences, multiple interrelated sectors, distorted labor markets, and costly trade, I find: trade amplifies the negative effect of labor market distortions; trade costs—large for poor countries, especially in agriculture—significantly contribute to international productivity differences; and explicitly modeling agriculture reveals additional channels through which poor countries may gain from trade. (JEL F41, J24, J43, O13, O19, Q11, Q17)

scholarly journals Selection, Agriculture, and Cross-Country Productivity Differences

2013 ◽  
Vol 103 (2) ◽  
pp. 948-980 ◽  
Author(s):  
David Lagakos ◽  
Michael E Waugh
Keyword(s):  
General Equilibrium ◽  
Labor Productivity ◽  
The Self ◽  
Poor Countries ◽  
Agricultural Work ◽  
Agriculture Sector ◽  
Self Selection ◽  
Food Requirement ◽  
Cross Country ◽  
Selection Of

Cross-country labor productivity differences are larger in agriculture than in non-agriculture. We propose a new explanation for these patterns in which the self-selection of heterogeneous workers determines sector productivity. We formalize our theory in a general-equilibrium Roy model in which preferences feature a subsistence food requirement. In the model, subsistence requirements induce workers that are relatively unproductive at agricultural work to nonetheless select into the agriculture sector in poor countries. When parameterized, the model predicts that productivity differences are roughly twice as large in agriculture as non-agriculture even when countries differ by an economy-wide efficiency term that affects both sectors uniformly. (JEL J24, J31, J43, O11, O13, O40)

scholarly journals Untitled Land, Occupational Choice, and Agricultural Productivity

2017 ◽  
Vol 9 (4) ◽  
pp. 91-121 ◽  
Author(s):  
Chaoran Chen
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
Occupational Choice ◽  
Agricultural Productivity ◽  
General Equilibrium Model ◽  
Poor Countries ◽  
Land Titling ◽  
The Impact

The prevalence of untitled land in poor countries helps explain the international agricultural productivity differences. Since untitled land cannot be traded across farmers, it creates land misallocation and distorts individuals' occupational choice between farming and working outside agriculture. I build a two-sector general equilibrium model to quantify the impact of untitled land. I find that economies with higher percentages of untitled land would have lower agricultural productivity; land titling can increase agricultural productivity by up to 82.5 percent. About 42 percent of this gain is due to eliminating land misallocation, and the remaining is due to eliminating distortions in individuals' occupational choice. (JEL J24, J43, O13, P14, Q12, Q15, Q24)

Population and Development in Poor Countries: Selected Essays

1994 ◽  
Vol 48 (2) ◽  
pp. 371-372
Author(s):  
Mark R. Montgomery
Keyword(s):  
Poor Countries

Rising Inequality in the New Global Economy

2006 ◽  
pp. 84-89 ◽  
Author(s):  
N. Birdsall
Keyword(s):  
Developing Countries ◽  
Global Economy ◽  
Slow Growth ◽  
Global Markets ◽  
Modern World ◽  
Government Programs ◽  
Poor Countries

Reasons of high inequality in the modern world are considered in the article. In developing countries it interacts with underdeveloped markets and inefficient government programs to slow growth, which in turn slows progress in reducing poverty. Increasing reach of global markets makes rising inequality more likely and deepens the gap between rich and poor countries. Because global markets work better for the already rich, we should increase the representation of poor countries in global fora.

Structuralism as a Pamphlet (On the Book by E. Reinert “How Rich CountriesGot Rich... And Why Poor Countries Stay Poor”. 2nd ed.)

2014 ◽  
pp. 147-153
Author(s):  
P. Orekhovsky
Keyword(s):  
Economic Theory ◽  
Economic Development ◽  
Structural Analysis ◽  
Increasing Returns ◽  
The Other ◽  
Static Theory ◽  
Poor Countries ◽  
Historical School ◽  
Socio Economic Development ◽  
The Relationship

The review outlines the connection between E. Reinert’s book and the tradition of structural analysis. The latter allows for the heterogeneity of industries and sectors of the economy, as well as for the effects of increasing and decreasing returns. Unlike the static theory of international trade inherited from the Ricardian analysis of comparative advantage, this approach helps identify the relationship between trade, production, income and population growth. Reinert rehabilitates the “other canon” of economic theory associated with the mercantilist tradition, F. Liszt and the German historical school, as well as a reconside ration of A. Marshall’s analysis of increasing returns. Empirical illustrations given in the book reveal clear parallels with the path of Russian socio-economic development in the last twenty years.

Sign in / Sign up

Export Citation Format

Share Document