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Free Mobility of Ca...
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Accinelli, Elvio
(author)
Free Mobility of Capital and Labor Force in a Two-Country Model: The Dynamic Game” for Growth
- Article/chapterEnglish2019
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American Institute of Mathematical Sciences (AIMS),2019
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LIBRIS-ID:oai:gup.ub.gu.se/283726
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https://gup.ub.gu.se/publication/283726URI
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https://doi.org/10.3934/jdg.2019013DOI
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Subject category:ref swepub-contenttype
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Subject category:art swepub-publicationtype
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In this paper, we consider a two-country and two-sector economy, where firms can choose to be innovative or not innovative, and workers to be skilled or unskilled. Using a dynamic game, we argue that exploiting the comparative advantages a country has in producing goods that use the most abundant factor of production, free mobility of capital and labour is beneficial for economic growth. However, if a country has a comparative advantage in a sector that uses intensely unskilled labour (which is the case of several underdeveloped economies), a poverty trap may arise. For this reason we argue that national Governments must ensure the technological development to improve competitiveness and therefore a social optimal use of the comparative advantages.
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Policardo, Laura
(author)
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Sanchez Carrera, Edgar
(author)
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Salas, Osvaldo,1953Gothenburg University,Göteborgs universitet,Förvaltningshögskolan,School of Public Administration(Swepub:gu)xsalos
(author)
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Göteborgs universitetFörvaltningshögskolan
(creator_code:org_t)
Related titles
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In:The Journal of Dynamics and Games: American Institute of Mathematical Sciences (AIMS)6:3, s. 179-1942164-60662164-6074
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