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Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs

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Abstract

This article formalizesthe theoretical interconnections among four post–industrialrevolution phenomena—the industrialization and growth take-offof rich northern nations, massive global income divergence, andrapid trade expansion. In stages-of-growth model, the four phenomenaare jointly endogenous and are triggered by falling trade costs.In the first growth stage (with high trade costs) industry isdispersed internationally, and growth is low. In the second (mediumtrade costs), the North industrializes rapidly, growth take-off,and the South diverges. In the third (low trade costs), highgrowth and global divergence become self-sustaining. In the fourthstage, when the cases of ``trading'' ideas decreases, the Southquickly industrializes and converges.

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Authors and Affiliations

  1. Institute of International Studies, 11a Ave dela Paix, 1202, Geneva, Switzerland

    Richard E. Baldwin

  2. CERAS-ENPC, Paris

    Philippe Martin

  3. Bocconi University and CEPR, Switzerland

    Gianmarco I. P. Ottaviano

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  1. Richard E. Baldwin
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  2. Philippe Martin
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  3. Gianmarco I. P. Ottaviano
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Baldwin, R.E., Martin, P. & Ottaviano, G.I.P. Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs. Journal of Economic Growth 6, 5–37 (2001). https://doi.org/10.1023/A:1009876310544

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