Trade and Growth : A Simple Model with Not-so-Simple Implications

We present a simple model of international trade (IT) and growth. The model yields a unique equilibrium path in which the relationship between exogenous and endogenous variables does not resemble the equations estimated by the empirical literature: Ours are not linear, despite the fact that technology and demand are linear, they do not include variables used in this literature like shares of IT and investment and include variables that have never been used in this literature such as comparative and absolute advantage, specialization patterns, saving habits and technology of partner countries. Finally, the impact of the initial level of income and the number of years that the economy has been open is far more complicated that had been assumed by the literature