Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics

This paper studies foreign debts of newly industrializing countries (NICs). These countries develop by imitating foreign technology and by exporting goods that are lower down the [`]quality ladder'. Differentiated by quality differences, such goods are often substitutes to those exported by adv...

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Main Author: LEUNG, Hing-Man
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Language:English
Published: Institutional Knowledge at Singapore Management University 2000
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Online Access:https://ink.library.smu.edu.sg/soe_research/242
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spelling sg-smu-ink.soe_research-12412010-09-23T05:48:03Z Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics LEUNG, Hing-Man This paper studies foreign debts of newly industrializing countries (NICs). These countries develop by imitating foreign technology and by exporting goods that are lower down the [`]quality ladder'. Differentiated by quality differences, such goods are often substitutes to those exported by advanced countries in the West. As NIC incomes rise their consumers seek to smooth their consumption over time. The novelty of our finding is that NICs borrow from abroad only when these goods are substitutes, but they would not have done so had the goods been complements. The intuition, obvious yet ignored in the literature, is the opposite terms of trade effects arising from substitutes and complements in consumption. Most papers in the [`]growth-debt' literature adopted the Romer/Lucas steady-state framework. They concentrated on issues such as population growth and foreign debt, but neglected the imitation-growth-debt relation. A simple theoretical model is devised to fill this gap in the literature. 2000-01-01T08:00:00Z text https://ink.library.smu.edu.sg/soe_research/242 info:doi/10.1016/s0264-9993(99)00019-x Research Collection School Of Economics eng Institutional Knowledge at Singapore Management University Economic Theory
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Economic Theory
spellingShingle Economic Theory
LEUNG, Hing-Man
Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics
description This paper studies foreign debts of newly industrializing countries (NICs). These countries develop by imitating foreign technology and by exporting goods that are lower down the [`]quality ladder'. Differentiated by quality differences, such goods are often substitutes to those exported by advanced countries in the West. As NIC incomes rise their consumers seek to smooth their consumption over time. The novelty of our finding is that NICs borrow from abroad only when these goods are substitutes, but they would not have done so had the goods been complements. The intuition, obvious yet ignored in the literature, is the opposite terms of trade effects arising from substitutes and complements in consumption. Most papers in the [`]growth-debt' literature adopted the Romer/Lucas steady-state framework. They concentrated on issues such as population growth and foreign debt, but neglected the imitation-growth-debt relation. A simple theoretical model is devised to fill this gap in the literature.
format text
author LEUNG, Hing-Man
author_facet LEUNG, Hing-Man
author_sort LEUNG, Hing-Man
title Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics
title_short Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics
title_full Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics
title_fullStr Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics
title_full_unstemmed Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics
title_sort trade and growth: a theoretical exploration into foreign debts by nics
publisher Institutional Knowledge at Singapore Management University
publishDate 2000
url https://ink.library.smu.edu.sg/soe_research/242
_version_ 1770569081595887616