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Endogenous Growth and South-North Trade

Endogenous Growth and South-North Trade

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In this atricle, we develop an endogenous growth model to analyze the impact of knowledge spillovers, the disparity in initial endowments and production technologies on economic growth of two trading regions. We found that the growth rates of technology development of the two regions become uneven unless they have an identical initial steady-state labor allocation between technology development and intermediate inputs. Trade in intermediate goods and knowledge spillovers improve welfare in both regions.

Ⅰ. Introduction

Ⅱ. The Model

Ⅲ. General Equilibrium

Ⅳ. The Balanced Growth Path

Ⅴ. Welfare

Ⅵ. Conclusion

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