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Trade and the Neoclassical Growth Model

Author

Listed:
  • Ben-David, Dan

    (Tel Aviv University, NBER, and CEPR)

  • B. Loewy, Michael

    (University of South Florida)

Abstract

The model developed in this paper expands upon the traditional neoclassical exogenous growth model by facilitating a long-run growth analysis of the impact of openness to trade within a multi-country framework. Openness affects growth by impacting the extent of knowledge spillovers from abroad. This feature effectively converts the traditional closed-economy exogenous growth model into a multi-country, open-economy endogenous growth model. Nevertheless, the conditional convergence and identical growth predictions of the neoclassical model are preserved here with the extent of trade now playing a role in determining the relative heights of the countries’ parallel output paths.

Suggested Citation

  • Ben-David, Dan & B. Loewy, Michael, 2003. "Trade and the Neoclassical Growth Model," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 1-16.
    • Handle: RePEc:ris:integr:0223
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    Citations

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    Cited by:

    1. Alper Aslan & Ebru Topcu, 2018. "The Relationship between Export and Growth: Panel Data Evidence from Turkish Sectors," Economies, MDPI, vol. 6(2), pages 1-15, April.
    2. Wei-Bin Zhang, 2020. "Monopsony and Discrimination in Labor Market in the Solow-Stiglitz Two-Group Neoclassical Growth Model," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 6(1), pages 1-19, June.
    3. Mohammad Sharif Karimi & Andrzej Cieslik, 2017. "Foreign Knowledge Spillovers and Total Factor Productivity Growth: Evidence from Four ASEAN Countries," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(2), pages 267-299, Spring.
    4. Wei-Bin Zhang, 2020. "Gender Power and Family Decision in an Extended Solowian Economic Growth Model," Technium Social Sciences Journal, Technium Science, vol. 5(1), pages 70-83, March.
    5. Tomasz Brodzicki, 2017. "The Role of Openness in Regional Economic Growth. The Case of Polish and Spanish NUTS-2 Regions," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 47, pages 43-64.
    6. Wei-Bin Zhang, 2022. "Stackelberg-Nash Equilibrium and Perfect Competition in the Solow-Uzawa Growth Model," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 96, pages 315-343, January-J.
    7. Sena Kimm Gnangnon, 2017. "The Impact of Multilateral Trade Liberalisation on Economic Development: Some Empirical Evidence," Economic Affairs, Wiley Blackwell, vol. 37(3), pages 397-410, October.
    8. Wei-Bin Zhang, 2018. "An Integration of Solow’s Growth and Dixit-Stiglitz’s Monopolistic Competition Models," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 68(4), pages 3-19, October-D.
    9. Wei-Bin Zhang, 2019. "Competition versus Monopolistic Competition by Integrating Solow-Uzawa and Dixit-Stiglitz," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 390-400, December.
    10. Wei-Bin Zhang, 2020. "Cournot-Nash Family Decision and Economic Growth in an Extended Solowian Model," Academicus International Scientific Journal, Entrepreneurship Training Center Albania, issue 21, pages 101-114, January.
    11. Datta, Manjira, 2017. "Existence and uniqueness of equilibrium in a distorted dynamic small open economy," Economics Letters, Elsevier, vol. 152(C), pages 19-22.
    12. Biswajit Maitra & Moutushi Chakraborty, 2021. "International trade, human capital and economic growth in Sri Lanka," International Journal of Economic Policy Studies, Springer, vol. 15(2), pages 405-426, September.
    13. Muhammad Usman Arshad & Muhammad Nadir Shabbir & Momna Niazi, 2023. "Trade Openness and Public Innovation: A Causality Analysis," SAGE Open, , vol. 13(3), pages 21582440231, September.
    14. Ingianni, Andrea, 2012. "Intra-European Union trade openness and new members’ output convergence: A time-series analysis," Economics Discussion Papers 2012-5, School of Economics, Kingston University London.
    15. . OLABISI, Olabode E & LAU, Evan, 2018. "Causality Testing between Trade Openness, Foreign Direct Investment and Economic Growth: Fresh Evidence from Sub-Saharan African Countries," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 437-464.
    16. Biswajit Maitra, 2021. "Relative role of external debt, FDI, and domestic investment in economic growth: evidence from Sri Lanka," International Journal of Economic Policy Studies, Springer, vol. 15(2), pages 329-347, September.
    17. Daniel Sakyi & Jose Villaverde & Adolfo Maza & Krishna Reddy Chittedieonardo, 2012. "Trade Openness, Growth and Development: Evidence from Heterogeneous Panel Cointegration Analysis for Middle-Income Countries," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, August.
    18. Suvra Prokash Mondal & Biswajit Maitra, 2021. "Assessing Growth Impact of Public Debt in Sri Lanka," Arthaniti: Journal of Economic Theory and Practice, , vol. 20(2), pages 201-226, December.
    19. Talberth, John & Bohara, Alok K., 2006. "Economic openness and green GDP," Ecological Economics, Elsevier, vol. 58(4), pages 743-758, July.

    More about this item

    Keywords

    Growth; Convergence; Trade liberatization;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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