Abstract
This paper provides an alternative explanation of some important stylized facts of development, including the phenomenon of international differences in service prices, in terms of differences in factor endowments between countries. In so doing, this paper advances a general equilibrium model of a small, open economy, which features non-traded goods as well as demand factors (thereby incorporating important economic aspects which were neglected by many others). An interesting finding which emerges from this exercise is that many puzzles in development can be explained simply in terms of differences in factor endowments between countries.
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