Helping Infant Economies Grow: Foundations of Trade Policies for Developing Countries

Stiglitz, Joseph E.; Greenwald, Bruce C.

This article discusses how to help infant economies grow and create the foundations of trade policies for developing countries. The information in this article is supported in a two-sector model that defines the industrial sector as the source of innovation and spillovers based on theory, evidence, history, and policy. The model contains both a traditional and an industrial sector. There are four key features to the model including spillovers from the industrial sector to the craft sector, spillovers that are geographically based, innovations that are concentrated in the industrial sector, and size, which is among the important determinants of the pace of innovation in the industrial sector.



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American Economic Review

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April 1, 2013