The Role of Trade in Structural Transformation

Teignier, Marc

doi:10.2139/ssrn.1984729

Cited by 49 publications

(49 citation statements)

References 66 publications

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“…Betts, Giri, and Verma (), Sposi (), Teignier (), and Uy, Yi, and Zhang () are recent examples of papers that study structural change in Korea. However, these papers do not consider the effect of changes in the relative price of investment.…”

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confidence: 99%

The Quantitative Importance of Openness in Development

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Quantitative Importance of Openness in Development Abstract This paper deals with a classic development question: how can the process of economic development -transition from stagnation in a traditional technology to industrialization and prosperity with a modern technology -be accelerated? Lewis (1954) and Rostow (1956) argue that the pace of industrialization is limited by the rate of capital formation which in turn is limited by the savings rate of workers close to subsistence. We argue that access to capital goods in the world market can be quantitatively important in speeding up the transition. We develop a parsimonious open-economy model where traditional and modern technologies coexist (a dual economy in the sense of Lewis (1954)). We show that a decline in the world price of capital goods in an open economy increases the rate of capital formation and speeds up the pace of industrialization relative to a closed economy that lacks access to cheaper capital goods. In the long run, the investment rate in the open economy is twice as high as in the closed economy and the per capita income is 23 percent higher. Terms of use: Documents inJEL-Code: O110, F430, O140.

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confidence: 99%

The Quantitative Importance of Openness in Development

2015

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“…Betts, Giri and Verma (2017) explore the effects of South Korea's trade policies on structural change, finding that these policies raised the industrial employment share and hastened industrialization in general. Teignier (2016) finds that international trade in agricultural goods affected structural change in the United Kingdom even more than in South Korea. We show in this paper that structural change may in fact be more consequential for international trade than trade is for explaining structural change in many countries.…”

Section: Introductionmentioning

confidence: 99%

Structural Change and Global Trade

Lewis

Monarch

Sposi

et al. 2018

gwp

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Services, which are less traded than goods, rose from 58 percent of world expenditure in 1970 to 79 percent in 2015. In a trade model featuring nonhomothetic preferences and input-output linkages, we find that such structural change has restrained the growth in world trade to GDP by 16 percentage points over this period. This magnitude is similar to how much declining trade costs have boosted openness. Moreover, structural change dampens the measured gains from trade by incorporating endogenous responses of expenditure shares to the trade regime. Ongoing structural change implies declining openness, even absent rising protectionism.

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“…Betts, Giri and Verma (2017) explore the effects of South Korea's trade policies on structural change, finding that these policies raised the industrial employment share and hastened industrialization in general. Teignier (2016) finds that international trade in agricultural goods affected structural change in the United Kingdom even more than South Korea. We show in this paper that structural change may in fact be more consequential for international trade than international trade is for explaining the pattern of structural change in many countries.…”

Section: Introductionmentioning

confidence: 99%

Structural Change and Global Trade

Lewis¹,

Monarch²,

Sposi³

et al. 2018

gwp

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Services, which are less traded than goods, rose from 50 percent of world expenditure in 1970 to 80 percent in 2015. Such structural change restrained "openness"-the ratio of world trade to world GDP-over this period. We quantify this with a general equilibrium trade model featuring non-homothetic preferences and input-output linkages. Openness would have been 70 percent in 2015, 23 percentage points higher than the data, if expenditure patterns were unchanged from 1970. Structural change is critical for estimating the dynamics of trade barriers and welfare gains from trade. Ongoing structural change implies declining openness, even absent rising protectionism.

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The Role of Trade in Structural Transformation

Cited by 49 publications

References 66 publications

The Quantitative Importance of Openness in Development

The Quantitative Importance of Openness in Development

Structural Change and Global Trade

Structural Change and Global Trade

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