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Title:Trade and development in a labor surplus economy PDF Logo
Authors:Barbier, Edward B.
Rauscher, Michael
Issue Date:2005
Series/Report no.:CESifo working papers 1481
Abstract:This paper looks at a model in which two countries trade agricultural and manufactured commodities. The manufactured-goods sector produces with increasing returns to scale under conditions of monopolistic competition. It is shown that an increase in land endowment (or an increase in agricultural productivity) can have negative welfare implications for both countries. This outcome can result under three different scenarios: asymmetries across countries, i.e. a North-South model, a neoclassical labor market in the home country's instead of a Lewisian market, and alternative utility functions.
Subjects:international trade
labor surplus economy
land expansion
monopolistic competition
North-South model
JEL:J61
F12
O18
O15
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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