1. Growth and Trade
Nisit Panthamit

2. Growth and Trade: The Effects of Factor Growth
Cheese (L-intensive)
Auto
(K-intensive)
Factor neutral growth
(Neutral technology progress)

3. Growth and Trade: The Effects of Factor Growth
Cheese (L-intensive)
Auto
(K-intensive)
Growth in capital only (capital-saving technological progress)

4. Growth and Trade: The Effects of Factor Growth
Cheese (L-intensive)
Auto
(K-intensive)
Growth in labor only (laobr-saving technological progress)

5. Production Effects of Growth and Trade
Neutral
growth A
Wine
Electronics
(a)
Wine
Electronics
(b) A
Ultra
anti-trade IV
imports
exports B
I Protrade
Anit-trade
III
II ultra protrade
Factor growth
Technology progress
Consumer preference change
Different Trade effects

6. Consumption Effects of Growth and Trade
III pro-trade
Ultra-
Protrad IV
(Neutral-trade consumption effect) PW Pe
World price B IC
Wine
Electronics
I Anti-trade
Neutral trade
production effect
II ultra-antitrade

7. The Effect of Growth on the Size of TradeB
Country I
Good Y
Good X R’ B’ A’
Anti-trade growth:
Trade triangle shrink

8. The Effect of Growth on the Size of Trade
Country I
Good Y
Good X R’ B’ A’
Nearly neutral growth
Trade triangle does not change A R B

9. The Effect of Growth on the Size of Trade
Country I
Good Y
Good X R’ B’ A’
Pro-trade growth:
Trade triangle enlarge A R B

10. Growth in the Scarce Factor in Large Country Case
General equilibrium diagram:
TOT1
IC2 C2 E2
Good A
Good B
TOT0
IC1 C1 E1
Scarce factor increases
TOT0
IC0 C0 E0

11. Decomposition of Gains from Trade and Growth
X(C)
Y (S) I0 A
A --> P: Resources efficient reallocation
A C0: consumption substitution effect PW P G1 C2 I2 C0
C0 C1: Income effect
Static gains:
From A to C 1:
Consumption Gains
(Gains from exchange) G0 C1 I1
From C 1 to C2 :
Production Gains
(Gains from specialization)

12. Dynamic Gains from Trade and GrowthP’ B I2 C3
From C 2
to C 3 :
Growth gains
Dynamic
gains
X(S) PW P G1 G0 C0 C1 C2 I2 I1 I0
(T)Y

13. Factor Growth and Production — The small country case
Rybczynski Theorem
Good B
(L-intensive) A0 B0
Good A
(K-intensive)
(PB/PA)int A1 B1
L labor increase

14. Large Country Growth, TOT Effects and Welfare
Large country’s export increases and influences the world price to decline, therefore affects the decrease in welfare of the large country
When production and exports
of good B is enlarged enough
to influence world price, and
worsen TOT
TOT1 C2
IC2 E2
TOT0
IC1 C1 E1
Good A
Good B
TOT0
IC0 C0 E0

15. Growth and Terms-of-Trade Effects
Case of Pro-trade growth in large country
Country I
Good B
Good A
TOT1
TOT0

16. Immiserizing Effect of Growth Welfare worse off after growth
TOT0 C1
IC1 E1
Growth 
TOT0 C0
IC0 E0
TOT1
IC2 E2 C2
C2 < C0
Good B
Good A

17. Immiserizing Effect of GrowthPW P C2 I2
X (or C)
Y (or S)
Case of TOT is worsen but a country still gains after economic growth I1 P’ C3
C2>C3 >C1 C0 C1 I0 A

18. Trade and Growth in the Asian countries
From import substitution to export-orientation
Openness and growth
Openness and economic growth