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Title: The Elixir of Growth: Trade, Non-Traded Goods and Development

Author(s): Patrick Minford, Eric Nowell and Jonathan Riley

Publication Date: May 1995

Keyword(s): Development, Technological Transfer, Unemployment, Unskilled Labour and Wage Dispersion

Programme Area(s): International Macroeconomics

Abstract: Development and convergence is explained as the transfer of technology embodied in machinery, to the manufacturing sector of those developing countries that institute the necessary property rights. The process is modelled within a Heckscher-Ohlin-Samuelson framework with capital mobility and endogenous supplies of immobile factors, skilled and unskilled labour and land. The model suggests a factor-price-based PPP method of measuring developing countries' GDP. Model simulations of the assumed technical transfer to developing countries imply falling wages and employment of unskilled labour in developed countries, combined with improvements in their terms of trade - shared gains from trade combined with a distributional bias.

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Bibliographic Reference

Minford, P, Nowell, E and Riley, J. 1995. 'The Elixir of Growth: Trade, Non-Traded Goods and Development'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1165