The impact of international trade on domestic growth is revisited in a model with dynamic externalities and static increasing returns to scale. The model embraces features of both classical and new growth and trade theories, allows for learning by doing, and integrates several strains of thought in a general equilibrium with two regions. In contrast to previous work, the model shows that intern...

We assess the comparative advantage and protection of China’s major agricultural crops using a modified Policy Analysis Matrix (PAM) and 1996 to 1998 data. We consider the following commodities: early indica rice, late indica rice, japonica rice, south wheat, north wheat, south corn, north corn, sorghum, soybean, rapeseed, cotton, tobacco, sugarcane, and a subset of fruits and vegetables. Consi...

This paper makes use of an agent-based framework to extend traditional models of comparative advantage in international trade, illustrating several cases that make theoretical room for industrial policy and the regulation of trade. Using an agent based implementation of the Hecksher-Ohlin trade model; the paper confirms Samuelson's 2004 result demonstrating that the principle of comparative adv...

Throughout the OECD, the operations of labour markets in the 1970s and 1980s have produced outcomes unfavourable to labour in general and unskilled labour in particular. In the US, this has been reflected in declining real wages, with a slight increase in the unemployment rate. In other countries, it has been reflected in a slowdown in real wages growth and a severe increase in unemployment. At...

There are two principal theories of why countries or regions trade: comparative advantage and increasing returns to scale. Yet there is virtually no empirical work that assesses the relative importance of these two theories in accounting for production structure and trade. We use a framework that nests an increasing returns model of economic geography featuring ‘home market effects’ with that o...

The burden sharing of pollution abatement costs raises the issue of how to share the costs between entities (country, region or industry) and how the pollution permits should be distributed between the parties involved. This paper explores this issue in the framework of a dynamic endogenous growth 2 sectors 2 regions 2 inputs Heckscher-Ohlin model of a small open multi-regional economy with an ...

On the one hand, the Stolper-Samuelson (SS) corollary of the Heckscher-Ohlin theorem predicts that both trade and FDI should take advantage of the abundance of low-skilled labour in DCs and so imply an increasing demand for domestic low skilled labour and hence decreasing within-country wage dispersion and income inequality (Wood, 1994 and 1997; for a critical view, see Milanovic, 2002). On the...