International Trade in a Dynamic Economy

  • Raveendra N. Batra


Recent years have witnessed a steadily growing application of the standard two-factor, two-good model to the solution of questions that arise in a growing economy, questions that were first raised in a seminal contribution by Oniki and Uzawa [5]. Although some insights as to what happens in the economy under conditions of growing factor supplies and technology were gained in Chapter 6, the nature of our analysis there was essentially comparative statics, for we were concerned primarily with the implications of exogenous and once-for-all growth in factor supplies. In the present chapter, however, our concern will be the development of a dynamic model where labour grows exogenously at a certain given rate, but where capital grows endogenously as a result of the savings habits of the factor owners. Oniki and Uzawa and, following them, otherst have used a technique which, for want of a better substitute, I call the ‘production function’ technique. The mathematical calculations under this technique are quite lengthy and oppressive, and a superficial glance is sufficient to discourage the student from getting seriously involved with the problem. Fortunately, the technique suggested by the activity-analysis approach used in the past chapters cuts down the length of the derivations and makes the issues susceptible to better comprehension.


International Trade Home Country Foreign Country Capital Good Excess Demand 
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    Bardhan, P. K., ‘On Factor Accumulation and the Pattern of International Specialisation’, Review of Economic Studies, xxxiii (Jan 1966) 39–44.Google Scholar
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    Bardhan, P. K., ‘Equilibrium Growth in the International Economy’, Quarterly Journal of Economics, lxxxix (Aug 1965) 455–64.Google Scholar
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    Oniki, H., and Uzawa, H., ‘Patterns of Trade and Investment in a Dynamic Model of International Trade’, Review of Economic Studies, xxxii (Jan 1965) 15–38.Google Scholar

Supplementary Readings

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    Atsumi, H., ‘The Long-Run Offer Function and a Dynamic Theory of Inter-national Trade’, Journal of International Economics, i (Aug 1971 ) 267–99.Google Scholar
  2. [7]
    Bardhan, P. K., and Lewis, S., ‘Models of Growth with Imported Inputs’, Economica, xxxvii (Nov 1970) 373–85.Google Scholar
  3. [8]
    Inada, K., ‘International Trade, Capital Accumulation, and Factor Price Equalization’, Economic Record, xliv (Sept 1968) 322–41.Google Scholar
  4. [9]
    Johnson, H. G., ‘Trade and Growth: A Geometrical Exposition’, Journal of International Economics, i (Feb 1971) 83–101.CrossRefGoogle Scholar
  5. [10]
    Stiglitz, J. E., ‘Factor Price Equalization in a Dynamic Economy’, Journal of Political Economy, lxxvm (May–June 1970 ) 456–88.Google Scholar
  6. [11]
    Vanek, J., ‘Economic Growth and International Trade in Pure Theory’, Quarterly Journal of Economics, lxxxv (Aug 1971) 377–90.Google Scholar

Copyright information

© Raveendra N. Batra 1973

Authors and Affiliations

  • Raveendra N. Batra

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