DP1803 | Global Income Divergence, Trade and Industrialization: The Geography of Growth Take-Offs

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This paper takes a modest step towards formalizing the theoretical interconnections among four post-Industrial-Revolution phenomena ? the industrialization and growth take-off of rich ?northern? nations, massive global income divergence, and rapid trade expansion. Specifically, we present a stages-of-growth model in which the four phenomena are jointly endogenous and are all triggered by a gradual fall in the cost of doing business internationally. Beyond providing a simple framework for exploring the logical connections among these phenomona, the model itself may be of some interest because it is, to our knowledge, the first endogenous growth model to display this Rostovian stages-of-growth feature.