NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Global Income Divergence, Trade and Industrializatiion: The Geography of Growth Take-Offs

Richard E. Baldwin, Philippe Martin, Gianmarco I. P. Ottaviano

NBER Working Paper No. 6458
Issued in March 1998
NBER Program(s):   ITI

This paper takes a step towards formalizing the theoretical interconnections among four post-Industrial Revolution phenomena - the industrialization and growth take-off of rich northern' nations, massive global income divergence, and rapid trade expansion. Specifically, we present a stages-of-growth model in which the four phenomena are jointly endogenous and all are triggered by a gradual fall in the cost of doing business internationally. In the first stage, while trade costs are high, industry is dispersed and growth is low. In the second stage, the north industrializes rapidly, growth takes off and the south diverges. In the third stage, high growth becomes self sustaining. The model shows under which conditions, in a fourth stage, the south can quickly industrialize and converge.

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Document Object Identifier (DOI): 10.3386/w6458

Published: Baldwin, Richard E., Philippe Martin and Gianmarco I. P. Ottaviano. "Global Income Divergence, Trade, And Industrialization: The Geography Of Growth Take-Offs," Journal of Economic Growth, 2001, v6(1,Mar), 5-37.

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