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An Extension of the Structural Change Model to International Economic Relations
Author(s) -
Araujo Ricardo Azevedo,
Teixeira Joanílio Rodolpho
Publication year - 2003
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/1467-999x.00175
Subject(s) - economics , extension (predicate logic) , open economy , balance (ability) , capital good , capital (architecture) , general equilibrium theory , comparative advantage , microeconomics , macroeconomics , international trade , exchange rate , computer science , medicine , history , archaeology , public good , physical medicine and rehabilitation , programming language
ABSTRACT In this paper Pasinetti's model of structural economic dynamics (1981) is extended to consider international economic relations. Conditions for full employment, full expenditure of income and equilibrium of the trade balance are established for an open economy that requires capital goods to produce final commodities. Analytical results concerning the benefits from free trade and international learning are formally studied. In addition, static and dynamic aspects of the ‘principle of comparative cost advantage’ are analysed considering the determinants of the specialization level.