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Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/136258
Growing through trade in intermediate goods: the role of foreign growth and domestic tariffs
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We show that pure Ricardian trade can account for the empirical evidence that domestic growth is more affected by foreign growth than by trade openness. To do this, we develop a two‐country model involving a backward economy that exchanges intermediate goods with a faster growing country. We obtain three main results regarding growth and welfare of the backward economy: (i) the growth‐enhancing comparative advantage is facilitated by faster foreign growth; (ii) the growth rate may be negatively affected or unaffected by a domestic tariff, while it is always positively impacted by foreign growth; and (iii) a domestic tariff could be welfare‐improving.
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ÁLVAREZ ALBELO, Carmen, MANRESA, Antonio and PIGEM-VIGO, Mònica. Growing through trade in intermediate goods: the role of foreign growth and domestic tariffs. Scottish Journal of Political Economy. 2018. Vol. 65, num. 4, pags. 414-436. ISSN 0036-9292. [consulted: 7 of October of 2026]. Available at: https://hdl.handle.net/2445/136258