In search of scale effects in trade and growth

David K. Backus; Patrick J. Kehoe; Timothy J. Kehoe

doi:10.1016/0022-0531(92)90060-U

In search of scale effects in trade and growth

David K. Backus
, Patrick J. Kehoe
, Timothy J. Kehoe

Research output: Contribution to journal › Article › peer-review

151 Scopus citations

Abstract

We look for the scale effects predicted by some theories of trade and growth based on the dynamic returns to scale that arise from learning by doing, investment in human capital, or development of new products. We find little empirical evidence of a relation between the growth rate of GDP per capita and the measures of scale implied by the theory. Restricting attention to the manufacturing sector, however, we find a significant relation between the growth rate of output per worker and the relevant scale variables. We also find that growth rates are significantly related to measures of intra-industry trade.

Original language	English (US)
Pages (from-to)	377-409
Number of pages	33
Journal	Journal of Economic Theory
Volume	58
Issue number	2
DOIs	https://doi.org/10.1016/0022-0531(92)90060-U
State	Published - Dec 1992
Externally published	Yes

Bibliographical note

Funding Information:
’ We thank Robert Barre, Lawrence Christiano, Larry Jones, Michael Devereux, Edward Prescott, Paul Romer, Jose Scheinkman, and two anonymous referees for useful comments; Harry Bowen, Paul Emerson, Robert Evenson, George McCarthy, and David Viry for help with data; the National Science Foundation and the Center for Japan-U.S. Business and Economic Studies fellowship program for financial support; and Hossain Amirizadeh and Karine Moe for excellent research assistance. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth
SDG 9 Industry, Innovation, and Infrastructure

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title = "In search of scale effects in trade and growth",

abstract = "We look for the scale effects predicted by some theories of trade and growth based on the dynamic returns to scale that arise from learning by doing, investment in human capital, or development of new products. We find little empirical evidence of a relation between the growth rate of GDP per capita and the measures of scale implied by the theory. Restricting attention to the manufacturing sector, however, we find a significant relation between the growth rate of output per worker and the relevant scale variables. We also find that growth rates are significantly related to measures of intra-industry trade.",

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note = "Funding Information: {\textquoteright} We thank Robert Barre, Lawrence Christiano, Larry Jones, Michael Devereux, Edward Prescott, Paul Romer, Jose Scheinkman, and two anonymous referees for useful comments; Harry Bowen, Paul Emerson, Robert Evenson, George McCarthy, and David Viry for help with data; the National Science Foundation and the Center for Japan-U.S. Business and Economic Studies fellowship program for financial support; and Hossain Amirizadeh and Karine Moe for excellent research assistance. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.",

year = "1992",

month = dec,

doi = "10.1016/0022-0531(92)90060-U",

language = "English (US)",

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AU - Backus, David K.

AU - Kehoe, Patrick J.

AU - Kehoe, Timothy J.

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N2 - We look for the scale effects predicted by some theories of trade and growth based on the dynamic returns to scale that arise from learning by doing, investment in human capital, or development of new products. We find little empirical evidence of a relation between the growth rate of GDP per capita and the measures of scale implied by the theory. Restricting attention to the manufacturing sector, however, we find a significant relation between the growth rate of output per worker and the relevant scale variables. We also find that growth rates are significantly related to measures of intra-industry trade.

AB - We look for the scale effects predicted by some theories of trade and growth based on the dynamic returns to scale that arise from learning by doing, investment in human capital, or development of new products. We find little empirical evidence of a relation between the growth rate of GDP per capita and the measures of scale implied by the theory. Restricting attention to the manufacturing sector, however, we find a significant relation between the growth rate of output per worker and the relevant scale variables. We also find that growth rates are significantly related to measures of intra-industry trade.

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In search of scale effects in trade and growth

Abstract

Bibliographical note

UN SDGs

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