Working Paper Series
Richard E. Baldwin, Philippe Martin and Gianmarco I.P. Ottaviano
Global Income Divergence, Trade and Industrialisation: The Geography of Growth Take-Offs
Abstract: This paper takes a step towards formalizing the
theoretical interconnections among four post-Industrial Revolution
phenomena - the industrialization and growth take-off of rich 'northern'
nations, massive global income divergence, and rapid trade expansion.
Specifically, we present a stages-of growth model in which the four
phenomena are jointly endogenous and all are trigged by a gradual fall in
the cost of doing business internationally. In the first stage, while trade
costs are high, industry is dispersed and growth is low. In the second
stage, the north industrializes rapidly, growth takes off and the south
diverges. In the third stage, high growth becomes self sustaining. The
model shows under which conditions, in a fourth stage, the south can
quickly industrialize and converge.
Keywords: Growth Take-Off; Industrial Revolution; Economic Geography; Endogenous Growth; Trade and Development; (follow links to similar papers)
JEL-Codes: F01; F43; N13; O19; (follow links to similar papers)
45 pages, February 1, 1998
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