
Contents
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4.1 Laying out the Steps 4.1 Laying out the Steps
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4.2 Gains from Trade and Engines of Growth 4.2 Gains from Trade and Engines of Growth
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4.3 The De-industrialization, Rent-Seeking, and Price Volatility Downsides 4.3 The De-industrialization, Rent-Seeking, and Price Volatility Downsides
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De-industrialization and Dutch Disease De-industrialization and Dutch Disease
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Rent-Seeking and Resource Curse Rent-Seeking and Resource Curse
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Commodity Price Volatility Commodity Price Volatility
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4.4 A Neo-Ricardian Model of De-industrializationClose 4.4 A Neo-Ricardian Model of De-industrializationClose
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4.5 The Agenda 4.5 The Agenda
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4 The Economics of Third World Growth Engines and Dutch Diseases
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Published:January 2011
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Abstract
This chapter explores the economics of de-industrialization and the so-called Dutch disease in the poor periphery. It is organized as follows. Section 4.2 repeats the standard arguments for the gains from trade and shows how the terms of trade boom might have augmented third world growth rates. Section 4.3 demonstrates how de-industrialization, rent-seeking, and price volatility, also induced by global forces, could have offset the gains from trade. Finally, since the de-industrialization observed in the nineteenth- century third world was not just the result of external global forces but also the result of local supply-side forces, Section 4.4 develops a simple neo-Ricardian model that helps us discriminate between the two forces. The chapter concludes with an agenda for the rest of the book.
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