Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94676
Authors: 
Trofimov, Georgi
Year of Publication: 
1997
Series/Report no.: 
IUI Working Paper 488
Abstract: 
The paper demonstrates how trade between developing countries can cause the divergence of long-run growth among these countries. The model describes two symmetric countries trading with each other and the industrial rest of the world. Bilateral trade occurs at any moment if the countries have different numbers of intermediate varieties. The country with a larger number produces more manufactured goods than the other country does. In the bilateral trade the advanced country exports manufactures and imports basic goods and can develop the comparative advantage over the other country. The model demonstrates that Southern integration leads to uneven development paths if there is a high complementarity between intermediate inputs.
Subjects: 
Trade
Intermediate inputs
Multiple equilibria
JEL: 
F15
F43
Document Type: 
Working Paper

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