Table Of ContentInternational Economics and Institutions
Series Editor: Jürgen Vosgerau
Klaus Wälde
Convergence,
Divergence and
Changing Trade
Patterns
Theoretical Inquiries into the Role of
Preferences, Factor Accumulation,
Technological Change and Government
Intervention
International Economics and Institutions
Editor
Hans-JilrgenVosgerau
InternationalEconomicsandInstitutions
AxelF.A.Adam-Muller
InternationaleUnternehmensaktivitiit,
Wechselkursrisikound Hedgingmit
Finanzinstrumenten
X,191Seiten.1995
AngelikaEymann
Consumers'Spatial
ChoiceBehavior
XII.192Seiten.1995
Klaus WaIde
Convergence,
Divergence
and Changing
Trade Patterns
Theoretical Inquiries into the Role of
Preferences, Factor Accumulation,
Technological Change and Government
Intervention
Springer-Verlag Berlin Heidelberg GmbH
Klaus Walde
UniversityofAmsterdam
DepartmentofMacroeconomics
Roetersstraat 11
NL-1018WB Amsterdam,The Netherlands
DieDeutscheBibliothek-CIP-Einheitsaufnahme
Walde.Klaus:
Convergence.divergenceandchangingtradepatterns:
theoreticalinquiriesinto theroleofpreferences.factor
accumulation.technologicalchangeandgovernment
intervention/ KlausWalde,- Heidelberg:Physica-Verl.,1995
(Internationaleconomicsandinstitutions)
Zug!.:Kiel.Univ.,Diss.
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DOI 10.1007/978-3-642-50034-3
©Springer-VerlagBerlinHeidelberg1995
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Foreword and acknowledgement
First ofall, I would like to thank my supervisor, ProfessorDr. Horst Herberg for
his commentsand suggestions he made atvarious stages ofmythesis.Pointing out
weak points helped to improve the quality of my investigations considerably. In
addition, I would like to thank himfor giving me access to a very good working
infrastructureat the Institut furTheoretischeVolkswirtschaftslehre.
Various parts ofthis thesis have been presented at conferences and seminars. I
would liketo express mythanks to Michael Rauscher andErnst Mohrfor initiating
research seminars at the University of Kiel and the Kiel Institute of World
Economics,respectively. Nearly my entire dissertation was presented at these very
stimulating and instructive seminars in a very cooperative and warm atmosphere
and commentswere veryuseful, especiallybythe initiators.My thanks also include
I
seminarparticipantsfor comments, remarks and suggestions.Chapter4benefited a
lot from discussions withWolfgang Keller.Having encountered himduring hisstay
at the Kiel Institute of World Economics was very important. I thank him for
discussionsand encouragementand for havingshownmewhat economics can be.I
wish him all the best for his future. Thanks also to Ingo Thomas for discussions
and having checkedsome calculations.Other chapterswere presentedatthe annual
meetings ofthe Econometric Society, the Verein fur Socialpolitik and the Royal
Economic Society as well as at a seminar at the Tinbergen Institute, Amsterdam,
The Netherlands. Useful comments were provided by participants, especially by
Paul Tang. First comments on very preliminary versions of some chapters were
providedbyRichard Frensch andJurgenMeckl, which were very encouraging.
So many otherscontributed, even without knowing it, that itis difficultto mention
them all;some, however, should not beforgotten: Frank Stehling for his readiness
to listen to questions of any kind, Uwe Rentmeister, Ludwig von Auer, Antje
Honing,Matthias Salge,Gunter Coenen, HannesBrocker,JensWabbler;Professor
Fieger for his excellent lectures in mathematics at the University of Karlsruhe,
AlbrechtMengel,the staffofthe RZ Kiel,who were alwaysextremelyfriendly and
cooperative, allthose providing the framework for doing research, especially Mrs.
Muller ofthe library ofthe Kiel Institute ofWorld Economics and finally those
who wrotethosewonderful textbookswithoutwhich Iwould never have advanced
vii
Forewordand acknowledgement
so far:Gandolfo (1986) on trade, Chiang (1974) on basic mathematics, Blanchard
and Fischer (1989) on Macro and dynamics and Lorenz (1989) on non-linear
dynamics.Ofcourse,asalways,allshortcomings, errors, omissionsand otherflaws
are solelymyownguiltand responsibility.
Thinking about the more important, non-professional, environment, I thank my
parents, and my familyin general, for their unconditional support in all respects
during allofmystudies.I dedicatethis dissertation to them.Being at least ofequal
importance, I won't forget myfriends,especiallythose, who could (and sometimes
had to) enjoy all mymoods duringthe last years;I amthinking, among others, of
Maike Krause andmydear friendJorg Steinbach.
Finally, I would liketo express mygratitude to the Filterwerke Mann + Hummel
GmbH for having covered some travel costs and, above all, to the state of
Schleswig Holstein (and thereby, implicitly, to taxpayers) for having financed my
thesis through a two-year scholarship. I do appreciate this scholarship a lot and
hope to havefulfilled mydutybyhavingdone mybest.
viii
Contents
1. Introduction
1.Introductionandoverview 1
2.Basic conceptsofthe "new"growththeory 4
2. Onanadditional condition forfactor-price equalization inintertemporal
Heckscher-Ohlinmodels
1.Introduction 14
2.Atwo-countryworld 15
3.Unequal factor rewards andincompletespecialization 17
4.Conclusion 18
Appendix
1.Continuoustimediscounting:Deriving equation (1) 18
2.Static utilitymaximization:Deriving equation(2) 19
3.Optimalallocation ofexpenditureovertime:Deriving equation(4) 20
4.Mark-up pricing:Deriving equation (6) 22
5.The capital market no-arbitragecondition:Deriving equation(9) 23
3. Unequal factor prices andincomplete specializationinaHeckscher-Ohlin
model ofendogenousgrowth
1.Introduction 24
2.Atwo-countryworld 25
3.Factorrewards, firmsizeandtrade patterns 31
4.Internationalmobilityofcapital 34
5.Conclusion 35
Appendix
1.Infinitehorizon maximizationI... 36
2.Infinite horizon maximizationII:Deriving equation(6) 38
3.Deriving equation (13) 39
4.The static equation system 39
5.Cone ofdiversification 40
6.Proofofproposition2 41
7.Lemmas 42
ix
Contents
4. Transitionaldynamics, convergenceandinternational capitalflows in
two-countrymodels ofinnovation andgrowth
1.Introduction 43
2.Atypical two-countryworld ofinnovation andgrowth 44
3.Local stabilityofthebalanced growthpath.......................................47
4.Global stabilityproperties andinnovation rates 53
5.Internationalfinancialcapital flows 57
6.Conclusion 59
Appendix
1.Local stabilityofthebalanced growthpath 60
2.Global stabilitypropertiesandinnovation rates 71
3.International capitalflows 72
5. Impatience, factor endowmentandtradepatterns ina smallopen economy
ofendogenousgrowth
1.Introduction 74
2.Asmallopen economy 76
3. Factorendowmentandtradepatterns 83
4.Time preference, factor endowment andtrade patterns 87
5.The priceversion oftheHeckscher-Ohlintheorem 91
6.Conclusion 92
Appendix
1.Unit cost functions 94
2.Demand for the differentiated good:Deriving equation(11) 95
3.Solutionofthe modeL 96
4.Marginal gains ofanewvariety 102
5.Outputratio....................................................................................102
6.Iso-output ratio line 103
7.Proofofproposition2 104
8.The splitderivative 105
9.Autarkywage ratio andfactor endowment.. 106
10.Proofofproposition3 108
x
