A Theoretical Study of the Relations between Inward Growth and the Openness of International Trade

The conventional and traditional view regarding the theory of economic growth is much different than the modern one. According to the traditional view, growth is based on and as a consequence of the long-run increase of capital stock, labuor force and technology under the condition of competition. For this reason, almost in most situations, labuor and capital face similar returns. In contrast, in the modern view, economic growth happens because of different aspects of production structure in which it has to react to the continuous changing of demand. Trade liberalization in these mentioned models has shown different results. For instance, in some empirical cases it has been observed that more liberalization could lead to worse economic growth even if after liberalization some relevant sectors vanish with the spreading of technology, the worsening remains.