TY  - JOUR
AU  - Baldwin,Richard E.
AU  - Seghezza,Elena
TI  - Trade-Induced Investment-led Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5582
PY  - 1996
Y2  - May 1996
UR  - http://www.nber.org/papers/w5582
L1  - http://www.nber.org/papers/w5582.pdf
N1  - Author contact info:
Richard Baldwin
Cigale 2
1010 Lausanne
SWITZERLAND
Tel: 41-22-908-5900
E-Mail: rbaldwin@cepr.org

Elena Seghezza
Genoa University
E-Mail: eseghezza@fas.harvard.edu
AB  - This paper presents five theoretical openness-and-growth links that can account for trade-induced investment-led growth.  The links are all demonstrated with neoclassical growth models developed in the context of trade models that allow for imperfect competition and scale economies.  This sort of old-growth-theory-in-a-new-trade-model has not been thoroughly explored in the literature since the profession skipped from old-growth-old-trade models straight to new-growth-new- trade models.  Nonetheless, such models are necessary to explain several key aspects of the econometric evidence on trade and growth. For example, cross-country data suggests that openness influences growth only via its effect on investment, and suggests that openness promotes investment in all countries whatever the capital-intensive of their exports (contrary to predictions of the old-growth-old-trade models).
ER  -