International Status Seeking, Trade, and Growth Leadership

Arbeitspapier

This paper formalizes international status seeking in a two-country model of endogenous growth: utility of agents in developing countries is affected by consumption gaps with advanced economies. By distorting intertemporal choices, envy tends to revert growth differentials in favor of the developing country when traded goods are substitutes. Notably, asymmetric pref- erences with endogenous status desire generate (i) convergence in growth rates in the presence of structural gaps, and (ii) convergence in income levels, if productivity differences are absorbed by technology diffusion. This process is driven by declining terms of trade and faster capital accumulation of the status seeker. A calibration exercise shows that the model predictions are consistent with the stylized facts that characterized the growth performance of East Asian economies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper Series ; No. 07/75

Classification and Topics

• Classification: Wirtschaft ; Technological Change: Choices and Consequences; Diffusion Processes ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Subject: Endogenous Growth ; International Trade ; Consumption Externalities ; Productivity Differences ; Status Seeking ; Technology Diffusion ; Wirtschaftliche Konvergenz ; Neid ; Nachfrageinterdependenz ; Produktivität ; Zwei-Länder-Modell ; Endogenes Wachstumsmodell ; Theorie ; Ostasien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Valente, Simone
• Event: Veröffentlichung
• (who): ETH Zurich, CER-ETH - Center of Economic Research
• (where): Zurich
• (when): 2007

Further information

• DOI: doi:10.3929/ethz-a-005502943
• Handle: http://hdl.handle.net/10419/171518
• Last update: 10.03.2025, 11:43 AM CET