Growth, resource allocation and welfare in an asymmetric general equilibrium model of trade

Abstract

This work is an extension of the existing literature on growth of factors of production, output expansions and welfare of a nation involved in international trade. It used to be an accepted notion that growth augments welfare without a question until Jagdish Bhagwati, and later Harry Johnson provides the contrarian views on the issues under specified conditions. Here, in this paper, an attempt is made to generalize the 2 × 2 × 2 models of Bhagwati and Johnson on factor growth, resource allocation, and welfare to 2 × 4 × 2 model. The effects of growth on output changes and conditions for immiserizing growth are enunciated in this modified general equilibrium framework involving nontraded and intermediate goods. Here, it should be noted, the existing literature from 1944 to the very recent past has been surveyed and integrated into this work.