Growth paths developed by international trade in Leontief-type dynamic models

Abstract

The present paper investigates some growth paths produced by the free market in certain dynamic input-output models. It is suggested that a developing economy, which will typically undergo structural changes, or a developed economy, which will make decisions on technological specialisation by strongly reducible technology carried out through international trade or on parameter values of terms of trade, may be fruitfully studied as several (in)dependent sub-economies, each with its own balanced growth path and optimal growth path with the turnpike property. For the test of these approaches, Japan's economy in the 1960s is simulated by the use of its input-output tables which may also contribute to the study of economic history of Japan. The main lessons from these investigations, however, are the suggested methods which may underlie the development of a wide international trade for a smoothly growing world economy.