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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmateco.2006.05.005 Byline: Junko Doi (a), Kazuo Nishimura (b), Koji Shimomura (c) Keywords: Endogenous growth; Externality; Stability; Trade pattern Abstract: We formulate a two-country endogenous growth model, which explain joint determination of long-run trade patterns and world growth rates. After providing the existence and local stability of the continuum of balanced growth paths, we show that main standard trade propositions hold under some modifications and that, subject to certain conditions concerning social and private rankings of factory intensities between production sectors, the higher is the growth rate, the smaller is the volume of international trade among balanced growth paths in the continuum. Author Affiliation: (a) Faculty of Economics, Kansai University, Yamate-cho, Suita, Osaka 564-8680, Japan (b) KIER, Kyoto University, Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501, Japan (c) RIEB, Kobe University, 2-1 Rokkodai-cho, Nada-ku, Kobe 657-8501, Japan Article History: Received 14 November 2005; Revised 18 May 2006; Accepted 27 May 2006 Article Note: (footnote) [star] We thank Christian Ghiglino, Takashi Kamihigashi and Gerhard Sorger for their useful comments on the earlier version of the paper.

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