Inequality, openness, and growth through creative destruction

• 成果类型: Article
• 署名作者: Schetter, Ulrich; Schneider, Maik T.; Jaeggi, Adrian
• 署名单位: University of Pavia; University of Graz; University of St Gallen
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2024.105887
• 发表日期: 2024
• 关键词: Dual economy; Dutch disease; Economic development; INEQUALITY; Non-homothetic preferences; Small open economy

摘要

We examine how inequality and openness interact in shaping the long-run growth prospects of developing countries. To this end, we develop a Schumpeterian growth model with heterogeneous households and non-homothetic preferences for quality. We show that inequality affects growth very differently in an open economy as opposed to a closed economy: If the economy is close to the technological frontier, the positive demand effect of inequality on growth found in closed-economy models may be amplified by international competition. In countries with a larger distance to the technology frontier, however, rich households satisfy their demand for high quality via importing, and the effect of inequality on growth is smaller than in a closed economy and may even be negative. In such case trade gives rise to the endogenous emergence of a 'dual economy' where some domestic sectors are highly innovative while others are lagging behind.