Tradable, Non-Tradable and Education Sectors in a Multi-Country Economic Growth Model with Endogenous Wealth and Human Capital

This study deals with international economic interactions with capital accumulation, human capital accumulation, economic structure and international trade by integrating the Solow growth model, the Uzawa two-sector growth model, the Uzawa-Lucas two-sector growth model, and the Oniki–Uzawa trade model within a comprehensive framework. In addition to learning by education in the Uzawa-Lucas model, we also consider Arrow’s learning by producing, and Zhang’s learning by consuming (creative learning) in the human capital accumulation equation. The model is built for any number of national economies and each national economy consists of one tradable, one non-tradable and one education sector. National economies are different in propensities to save, to obtain education and to consume, and in learning abilities. We show that the dynamics of the J-country world economy can be described by 2J differential equations. We simulate the model to demonstrate existence of equilibrium points and motion of the dynamic system. We also demonstrate how changes in the propensity to obtain education, the population, the propensity to save, and the education sector’s total productivity affect global economic development.