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A Factor Endowment Theory of Endogenous Growth and International Trade

Author

Listed:
  • Yunfang Hu

    (Department of Economics, Kobe University, Japan)

  • Murray C. Kemp

    (Australian Graduate School of Management, University of New South Wales, Australia)

  • Koji Shimomura

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

The Frankel-Romer-Lucas theory of endogenous growth rests on the assumption of knowledge-based externalities and price-taking representative households. It is argued that, in a context of long-run growth, these assumptions are mutually incompatible (that representative households will co-operate to internalize the externalities) and that therefore the relevance of the theory must be questioned. In the present paper we offer a model of endogenous growth, based on representative households but recognizing that, in a context of long-run growth, the households must cooperate. Our economy consists of many countries, populated by households which are identical within countries but not necessarily across countries. In each country, government expenditure on a public intermediate good plays a crucial role in the realization of persistent growth. It is shown that the long-run pattern of international trade is determined in a Heckscher-Ohlin manner.

Suggested Citation

  • Yunfang Hu & Murray C. Kemp & Koji Shimomura, 2004. "A Factor Endowment Theory of Endogenous Growth and International Trade," Discussion Paper Series 150, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:150
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp150.pdf
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    References listed on IDEAS

    as
    1. Howitt, Peter & Mayer-Foulkes, David, 2005. "R&D, Implementation, and Stagnation: A Schumpeterian Theory of Convergence Clubs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 147-177, February.
    2. Ryoji Ohdoi, 2007. "Productive Government Spending, Patterns Of Specialization And Economic Growth In A Small Open Economy," The Japanese Economic Review, Japanese Economic Association, vol. 58(1), pages 127-146, March.
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    Cited by:

    1. Hu, Yunfang & Ohdoi, Ryoji & Shimomura, Koji, 2008. "Indeterminacy in a two-sector endogenous growth model with productive government spending," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 1104-1123, September.
    2. Akihiko Yanase & Makoto Tawada, 2012. "History‐Dependent Paths And Trade Gains In A Small Open Economy With A Public Intermediate Good," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 303-314, February.
    3. Ida D'Attoma & Silvia Pacei, 2014. "Offshoring and Firm Performance: Evidence from the Italian Manufacturing Industry," Review of Development Economics, Wiley Blackwell, vol. 18(1), pages 29-44, February.
    4. Basant Kapur, 2015. "A symmetric Heckscher–Ohlin model of endogenous growth," Journal of Economics, Springer, vol. 116(3), pages 183-209, November.
    5. Takumi Naito & Ryoji Ohdoi, 2011. "A two-country model of trade and growth with intersectoral knowledge spillovers," Journal of Economics, Springer, vol. 103(1), pages 39-58, May.
    6. Yunfang Hu & Murray C. Kemp & Koji Shimomura, 2006. "Endogenous Growth: Fragile Foundations?," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 113-115, February.

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