Growth, Conventional Production and Tourism Specialisation: Technological Catching-up Versus Terms-of-Trade Effects

Arbeitspapier

This paper extends the ’expanding-varieties’ growth model in a two-countries-two-goods setup, and describes the dynamics of growth rates and terms of trade when the industry-based economy is the innovation leader, while the tourism-based economy is the follower (i.e. increases the number of intermediate inputs by readapting innovations developed abroad). Two types of transitional dynamics may exist: technological catching-up and technological falling-behind. Contrary to the standard result, technological catching-up by the follower is associated with lower growth rates with respect to the leader, whereas terms-of-trade effects guarantee positive growth differentials for the tourism-based economy when the technological gap with the leader increases over time. The underlying principle of ’increased relative demand’ might explain the good economic performance observed in tourism-dependent economies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 140.2005

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Growth of Open Economies ; Technological Change: Choices and Consequences; Diffusion Processes
• Subject: Endogenous growth ; Two-country models ; Technology diffusion ; Trade specialization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Valente, Simone
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/74278
• Last update: 10.03.2025, 11:43 AM CET