Imports and Economic Growth

One. Introduction.- 1.1. Approach.- 1.2. Plan of the Book and Results.- Two. The Long-Run Growth Rate in Alternative Theories of Trade and Growth: A Survey of the Literature.- 2.1. The Two-Sector Neoclassical Theory: the Basic Model.- The model.- The small-country case.- The two-country system.- Conclusion.- 2.2. Extensions and Variations of the Basic Neoclassical Model.- Alternative saving behaviour.- Both sectors’ goods can be consumed.- Transport costs.- Intermediate goods.- Dated capital goods: vintage models.- Relaxing balance of trade equilibrium.- Conclusion.- 2.3. Two-Sector Growth with Complementarity in Production.- 2.4. Growth with Indispensable Imports.- Complementarity of imports.- Substitutability of imports and domestic factors.- 2.5. An Alternative Theory? The Neo-Ricardian Approach.- The growth rate.- The steady-state method.- Three, Imports as an Indispensable Factor of Production.- 3.1. Imperfect Substitutability of Imports.- Indispensability of imports caused by specific non-traded factors.- The role of innovation and technological improvements.- Indispensability of imports caused by adjustment costs.- Conclusion.- 3.2. Imports as an Input.- 3.3. The Production Function.- Properties of the production function.- Separability.- Share and elasticity functions.- The production function at extreme factor ratios.- 3.4. Import Demand.- Profit maximization with non-constant returns.- Cost minimization with output constraint.- Second-order conditions.- 3.5. Defining a Corresponding Autarkic Economy.- Appendix 3.1. Tables 3.1 and 3.2, Methods and Sources.- Appendix 3.2. Derivatives and Allen Partial Elasticities of Substitution of a Separable Function.- Appendix 3.3. The Transitional Production Function.- Four. Economic Growth in Economies of Moderate Size: The Case of Free Trade and Separability of Imports and Domestic Factors..- 4.1. Basic Relations and Assumptions.- 4.2. Direction of the Evolution of the Capital-Labour Ratio.- Non-constancy of the capital-labour ratio under steady growth of capital.- Long-run growth of the capital-labour ratio.- Long-run decline of the capital-labour ratio.- Trade and national limits to growth.- 4.3. A Steady-Growth Theorem.- 4.4. The Influence of International Circumstances and Technology on the Long-Run National Growth Rate.- Foreign-demand growth.- The terms of trade elasticity of foreign demand.- The rate of growth of labour, labour’s share in domestic factors and the elasticity of capital-labour substitution.- Technical progress and the rate of returns to scale.- Imports’ share and the elasticity of substitution between imports and domestic factors.- Summary of conclusions.- 4.5. Practical Interpretation and Policy Implications.- The rate of growth of foreign demand.- The terms of trade elasticity of foreign demand.- Import substitution and export-led growth.- Appendix 4.1. Steady Growth under Unfavourable Conditions of Trade and Stagnating Technical Progress.- Appendix 4.2. Parameter Variations and the Steady-Growth Rate.- Five. Economies of Moderate Size: Consequences of Tariffs and Non-Separability of Imports and Domestic Factors.- 5.1. Non-Separability of Imports and Domestic Factors.- Formulation of the model without separability assumption.- The capital-labour ratio in the long run.- A steady-growth theorem.- Interpretation of the steady-growth theorem.- 5.2. Effects of Import Duties.- Short-run consequences of tariffs: optimum duties 166 Independence of the long-run growth rate of import duties.- Effects of duties on the level of income.- Consequences of an alternative specification of import demand.- 5.3. Non-Separability and Import Duties.- Appendix 5.1. Optimum Duties and Steady Growth of Cobb-Douglas Economies.- Six. Transmission and Generation of Growth by North-South Trade.- 6.1. Equilibrium Trade.- 6.2. Direction of the Evolution of the Capital-Labour Ratios.- Non-constancy of the capital-labour ratios under steady growth of both regions’ capital stocks.- Growth of the capital-labour ratios.- 6.3. A Steady-Growth Theorem.- 6.4. Determinants of the North’s and South’s Long-Run Growth Rates.- The rates of technical progress.- The natural rates.- The rates of returns to scale.- Labour’s shares.- The import shares.- Summary and conclusions.- 6.5. Implications.- The growth of the north-south system, 1955-1979.- North-south trade and the south’s growth rate, 1955-1979.- Impact of the south’s development on the growth of the north, 1980-2050.- Appendix 6.1. Parameter Variations and the Steady-Growth Rates.- Appendix 6.2. Sources of Tables 6.7, 6.8 and 6.9.- Seven. North-South Aid and the North’S Income.- 7.1. The Transfer Problem.- 7.2. North-South Aid: a Tertiary Blessing for the North.- Modelling a north-south transfer.- The tertiary effects of a north-south transfer.- 7.3. The Trajectory of North-South Aid Maximizing the North’s Consumption.- An optimal aid and investment theorem.- Proof of the optimal-path theorem.- Appendix 7.1. The Transfer Effect and the Capital Stocks.- Eight. Stability of The Goods Market and the Balance of Trade When Imports are Indispensable Inputs.- 8.1. Stability of the Goods Market with Balanced Trade.- Treatment in the literature.- The case where imports are indispensable inputs.- 8.2. Stability of the Balance of Trade.- Notes.- References.- List of Main Symbols.- Author Index.