Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/171567 
Year of Publication: 
2010
Series/Report no.: 
Economics Working Paper Series No. 10/124
Publisher: 
ETH Zurich, CER-ETH - Center of Economic Research, Zurich
Abstract: 
We analyze the relative growth performance of open economies in a two-country model where different endowments of labor and a natural resource generate asymmetric trade. A resource-rich economy trades resource-based intermediates for final manufacturing goods produced by a resource-poor economy. Productivity growth in both countries is driven by endogenous innovations. The effects of a sudden increase in the resource endowment depend crucially on the elasticity of substitution between resources and labor in interme- diates' production. Under substitution (complementarity), the resource boom generates higher (lower) resource income, lower (higher) employment in the resource-intensive sector, higher (lower) knowledge creation and faster (slower) growth in the resource-rich economy. The resource-poor economy adjusts to the shock by raising (reducing) the relative wage, and experiences a positive (negative) growth effect that is exclusively due to trade.
Subjects: 
Endogenous Growth
Endogenous Technological Change
Natural Resources
International Trade
JEL: 
E10
F43
L16
O31
O40
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
803.83 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.