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Convergence in a dynamic Heckscher–Ohlin model with land

Dolores Guillo, Maria; Perez-Sebastian, Fidel; Guilló, María Dolores; Pérez-Sebastián, Fidel

Authors

Maria Dolores Guillo

Fidel Perez-Sebastian

María Dolores Guilló

Abstract

Convergence among nations that share the same preferences and technologies is a key result of the closed-economy neoclassical growth framework that has received substantial support in the data. However, Heckscher–Ohlin versions of the two-sector neoclassical growth model predict that nations that differ in their capital–labor ratios may not converge to the same steady state, even if they are identical in all other aspects. This is a puzzling result that warns us about potential dangers of international trade. In this paper we show that when land, an input in fixed supply, is introduced into the model, international trade in goods no longer limits the capacity of poor nations to catch up with the advanced world.

Journal Article Type Article
Publication Date 2015-08
Journal Review of development economics
Print ISSN 1363-6669
Electronic ISSN 1467-9361
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 19
Issue 3
Pages 725-734
Institution Citation Guilló, M. D., & Pérez-Sebastián, F. (2015). Convergence in a dynamic Heckscher–Ohlin model with land. Review of development economics, 19(3), 725-734. https://doi.org/10.1111/rode.12158
DOI https://doi.org/10.1111/rode.12158
Keywords Convergence, Heckscher–Ohlin model
Publisher URL http://onlinelibrary.wiley.com/doi/10.1111/rode.12158/abstract
Additional Information Authors' accepted manuscript of article: Guillo, M. D. and Perez-Sebastian, F. (2015), Convergence in a Dynamic Heckscher–Ohlin Model with Land. Review of Development Economics, 19: 725–734. doi:10.1111/rode.12158

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