Economic Growth and International Trade

Abstract

The topic of economic growth and international trade tries to tackle such interesting questions as: what causes economic growth? what is the effect of economic growth on the pattern and composition of international trade? does a country share the benefits of its economic growth with other countries, i.e. does economic growth affect the terms of trade (t/t)? if economic growth does affect the t/t adversely, it is possible for the t/t effect to outweigh the benefits of economic growth, i.e. it is possible for a country to end up worse off as a result of economic growth? does international trade affect economic growth? and all the familiar questions regarding the effects of economic growth on factor payments, income distribution, etc. That is why the topic forms a substantial part of the theory of international trade and a proper analysis of the subject would require a whole book. However, at this level of exposition one can justifiably be highly selective with regard to the issues requiring specific discussion; the purpose of this chapter is, therefore, to do precisely that in a very brief and concise manner.