TRADE, NON-SCALE GROWTH AND UNEVEN DEVELOPMENT

Abstract

This paper investigates the relationship between trade and economic development using a two-country, non-scale growth model. Depending on the share of the expenditure for manufactured goods, we obtain two different results with regard to long-run production patterns. Whether or not the follower country can catch up with the leader country in the long run depends on two factors: (1) the patterns of production in both countries and (2) the measure of economic welfare that is used, i.e. per capita income or per capita consumption.