A Pasinettian approach to international economic relations: the pure labor case

In this paper, the pure labor version of Pasinetti's model of structural change and economic dynamics is extended to consider international economic relations. The conditions for full employment, full expenditure of national income and trade balance equilibrium are established along with solutions for the systems of physical quantities and prices in an open economy. Analytical results concerning the benefits of international trade and learning are studied with formal rigor. Then static and dynamic aspects of the principle of comparative cost advantages are analyzed considering the determinants of the level of specialization and international prices.