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Trade, development, and poverty-induced comparative advantage

Author

Listed:
  • Robbert Maseland
  • Albert Vaal

Abstract

This paper deals with the relation between trade and development when poverty affects individual decision making. We develop a two-sector model that links production and schooling decisions under poverty with standard neo-classical trade analyses. The decision to either work or acquire skills depends on households having reached subsistence levels of income, implying that the income level of a country becomes important in establishing comparative advantages and trade patterns. Trade liberalisation is always allocative efficient, but its timing is important for the speed by which countries industrialise. Our analysis supports the idea that there are instances that stalling trade liberalisation may serve industrial development.

Suggested Citation

  • Robbert Maseland & Albert Vaal, 2011. "Trade, development, and poverty-induced comparative advantage," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(2), pages 153-174.
    • Handle: RePEc:taf:jitecd:v:20:y:2011:i:2:p:153-174
    DOI: 10.1080/09638190902856764
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    References listed on IDEAS

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    1. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
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    4. Robert T. Jensen & Nolan H. Miller, 2007. "Giffen Behavior: Theory and Evidence," CID Working Papers 148, Center for International Development at Harvard University.
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