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Applying Burgstaller's Ricardian two-sector growth model to the two-country open economy, this paper shows that the long-run Heckscher–Ohlin theorem holds also in a Ricardian world. In addition it is shown that, if two Ricardian countries that are different only in their demand parameters open trade, comparative advantage and the corresponding trade pattern at trade opening continue in the long run after the opening of trade. [ABSTRACT FROM AUTHOR]

This paper examines the dynamic implications of international trade in a two-sector overlapping-generations economy with endogenous growth. It analyses the global dynamics of this model for both a closed economy and a two-country world economy. It shows how international trade can cause the world economy to sort itself out into groups of fast and slow-growing economies and can also cause one country to catch up and overtake another's growth rate. U thus provides theoretical support for empirical papers which find that the world distribution of income is diverging. [ABSTRACT FROM AUTHOR]

The paper formally integrates Ricardo's two-sector growth model with his theory of comparative advantage. Differences with conventional representations of Ricardian trade theory, as well as with Heckscher-Ohlin-Samuelson theory, are noted. It is shown that the Ricardian equilibrium terms of trade are fully determinate, as against the standard Millian view. Also, trade may, depending on direction of specialization, inhibit rather than promote growth and lead to a net contraction of the world economy. [ABSTRACT FROM AUTHOR]

The aim of this paper is to re-appraise the significance of the "real" as distinct from the "monetary" aspect of Smith's international trade theory. It will be argued that Smith's theory of foreign trade is so closely interwoven with his theory of domestic economic development that the two have to be considered together. This means that Smith's trade theory should not be treated simply as a static cross-section analysis of the existing pattern of trade based on the allocation of the given resources with the given productivity; rather it should be considered as an attempt to study the longer-run mutual interaction between foreign trade and domestic economic development, essentially involving an increase in the total volume of the resources and a rise in their productivity. [ABSTRACT FROM AUTHOR]

The literature on trade and growth provides several examples in which factor augmentation or technical progress can reduce the welfare of an open economy. The most famous example of such "immiserizing growth" is Bhagwati's (1958) demonstration that growth that expands the export industry can reduce welfare by causing the terms of trade to deteriorate. More recently, examples have been provided in which growth due to either factor expansion or technical progress in the presence of domestic distortions can be immiserizing even in a small, open economy. Johnson (1967), for example, shows that technical progress in the import-competing industry or growth of the factor used intensively in that industry can reduce welfare if the industry is protected by a tariff. Similarly, Bhagwati (1969) shows that the presence of factor market distortions also introduces the possibility of immiserizing growth. He concludes more generally that growth may be immiserizing in the presence of any of several types of distortions.
While the possibility of immiserizing growth in the presence of distortions has been recognized, little has been said about conditions under which growth is necessarily non-beneficial or non-harmful. The present paper derives sufficient conditions for growth, in the form of either factor augmentation or technical progress, not to immiserize a small, open economy characterized by variable returns to scale (VRS), production and consumption taxes, tariffs and factor market distortions. Moreover, in each case we provide an explicit condition for the effect of growth on welfare when growth takes the form of an infinitesimal increase in a factor supply or improvement in technology.[1]. [ABSTRACT FROM AUTHOR]

This article presents an empirical test on comparative cost theories. The tests are undertaken for three pairs of countries: Japan and the U.S., Peru and the U.S. and the Great Britain and the U.S. Although the choice of countries is determined by the availability of the relevant data, the coverage is interesting since the countries involved are at different levels of economic development, have different relative factor prices and due to differences in their geographical location, are likely to have different endowments of particular natural resources. The main finding of the tests discussed in this paper is that comparative costs can be explained in terms of the combined influence of the causal factors stressed in the Ricardian and Heckscher-Ohlin theories, even though neither theory gives satisfactory results when considered independently of the other.