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Trade in a two sector endogenous growth model with two accumulating factors

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  • Birgit KIRSCHBAUM-BEHL

    (University of Greifswald, Germany)

Abstract

This paper provides an endogenous growth model including technology diffusion induced by openness. A two sector model composed of a consumption good sector and an education sector shows that the openness leads to a compensation of the lack considering the human capital stock. It is a comparison between a relatively less developed country, which does not use physical capital in the education sector, and a relatively developed country using both, human and physical capital in the education sector. By importing a relatively human capital intensive good, the relatively less developed country benefits from technology diffusion. This paper shows, that introducing trade implies a higher growth rate than in a closed economy.

Suggested Citation

  • Birgit KIRSCHBAUM-BEHL, 2019. "Trade in a two sector endogenous growth model with two accumulating factors," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(619), S), pages 217-259, Summer.
    • Handle: RePEc:agr:journl:v:xxvi:y:2019:i:2(619):p:217-259
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    References listed on IDEAS

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