Working Paper No. 488

Trade, Southern Integration, and Uneven Development

Published: September 1997Pages: 32Keywords: Trade; Intermediate inputs; Multiple equilibriaJEL-codes: C51; O11; O47; F15

Trade, Southern Integration, and Uneven Development Georgi Trofimov


The paper demonstrates how trade between developing countries can cause the divergence of long-run growth among these countries. The model describes two symmetric countries trading with each other and the industrial rest of the world. Bilateral trade occurs at any moment if the countries have different numbers of intermediate varieties. The country with a larger number produces more manufactured goods than the other country does. In the bilateral trade the advanced country exports manufactures and imports basic goods and can develop the comparative advantage over the other country. The model demonstrates that Southern integration leads to uneven development paths if there is a high complementarity between intermediate inputs.

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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