On the Mechanics of Trade-Induced Structural Transformation

CIRPEE Working Paper No. 05-29

23 Pages Posted: 2 Nov 2005

See all articles by Sylvain Dessy

Sylvain Dessy

Université Laval - Département d'Économique

Flaubert Mbiekop

University of Quebec at Montreal

Stephane Pallage

University of Quebec at Montreal - Department of Economics; Centre interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)

Date Written: October 2005

Abstract

Gains from trade come a certain degree of specialisation among trade partners. Specialisation in the case of an agriculture-based developing country might be feared to imply a higher reliance than ever on low skill labour. Trade might thus be seen as a step away from the much awaited structural transformation of the economy, which can only come with increases in agricultural productivity. In this paper, we suggest that it needs not be the case. We show that trade openness can in fact trigger the structural transformation of such an agrarian society. It can induce a higher reliance on human capital accumulation and produce the necessary productivity gains for an economy to pick up. Our dynamic general equilibrium model provides a clear illustration of the mechanics behind such structural transformation.

Keywords: Trade openness, skill-supply, agricultural extension services, general equilibrium

JEL Classification: F16, J21, J22, O11, O24

Suggested Citation

Dessy, Sylvain and Mbiekop, Flaubert and Pallage, Stephane, On the Mechanics of Trade-Induced Structural Transformation (October 2005). CIRPEE Working Paper No. 05-29. Available at SSRN: https://ssrn.com/abstract=830624 or http://dx.doi.org/10.2139/ssrn.830624

Sylvain Dessy

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

Flaubert Mbiekop

University of Quebec at Montreal ( email )

P.O. Box 8888, Downtown Station
Succursale Centre Ville
Montreal, Quebec H3C 3P8
Canada

Stephane Pallage (Contact Author)

University of Quebec at Montreal - Department of Economics ( email )

P.O. Box 8888, Downtown Station
Montreal, Quebec H3C 3P8
Canada
514-987-3000 ext. 8730 (Phone)
514-987-8494 (Fax)

Centre interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)

Pavillon De Sève
Ste-Foy, Quebec G1K 7P4
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
66
Abstract Views
752
rank
335,395
PlumX Metrics