Neoclassical Growth, Manufacturing Agglomeration, and Terms of Trade

Dieter M. Urban

Research output: Working paperResearch

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This paper presents an integrated view of economic growth, development traps, and economic geography. We explain why there is income convergence among some countries (neoclassical regime) and income divergence among others (poverty trap regime). Income convergence (divergence) and manufacturing industry diffusion (agglomeration) are re-enforcing each other in a cumulative process. Moreover, trade openness may trigger a catch-up process of an economy that is stuck in a “poverty trap”. This catch-up is characterized by an increase in the investment-to-GDP ratio and an improvement of the terms of trade.
Original languageEnglish
Place of PublicationCopenhagen
PublisherDepartment of Economics. Copenhagen Business School
Number of pages43
Publication statusPublished - 1998
SeriesWorking Paper / Department of Economics. Copenhagen Business School


  • Convergence
  • Agglomeration
  • Poverty trap
  • Terms of Trade
  • Complementarity

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