TRADE AND THE RATE OF INCOME CONVERGENCE


Dan Ben-David
Tel Aviv University,
NBER and CEPR

and

Ayal Kimhi
Hebrew University of Jerusalem
 
 

ABSTRACT

This paper examines how changes in the extent of trade are related to changes in the extent of income convergence between countries.  Export and import data are used as the criteria for determining bilateral trade between major trade partners, resulting in the creation of 127 pairs of countries on the basis of export data and 134 pairs on the basis of import data.  An increase in trade between major trade partners _ and in particular, increased exports by poorer countries to their wealthier partners _ is shown to be related to an increase in the rate of convergence between the countries.  

 

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