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Trade and PovertyWhen the Third World Fell Behind$
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Jeffrey G. Williamson

Print publication date: 2011

Print ISBN-13: 9780262015158

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262015158.001.0001

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The Economics of Third World Growth Engines and Dutch Diseases

The Economics of Third World Growth Engines and Dutch Diseases

(p.45) 4 The Economics of Third World Growth Engines and Dutch Diseases
Trade and Poverty

Jeffrey G. Williamson

The MIT Press

This chapter explores the economics of de-industrialization and the so-called Dutch disease in the poor periphery. It is organized as follows. Section 4.2 repeats the standard arguments for the gains from trade and shows how the terms of trade boom might have augmented third world growth rates. Section 4.3 demonstrates how de-industrialization, rent-seeking, and price volatility, also induced by global forces, could have offset the gains from trade. Finally, since the de-industrialization observed in the nineteenth- century third world was not just the result of external global forces but also the result of local supply-side forces, Section 4.4 develops a simple neo-Ricardian model that helps us discriminate between the two forces. The chapter concludes with an agenda for the rest of the book.

Keywords:   de-industrialization, Dutch disease, poor periphery, nineteenth century, third world, economic growth, trade boom, neo-Ricardian model

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