Growth Gains from Trade and Education

IMF Working Papers, March 1, 1999

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Growth Gains from Trade and Education

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Bibliographic details

• Authors: Yong-jin Kim, Se-Jik Kim
• Published: March 1, 1999
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451844023.001

Model and mechanism

• Presents a multisector growth model where education enhances general human capital.
• General human capital is essential for increasing or maintaining the mobility of workers across industries.
• Education combined with international trade raises workers’ ability to adapt and move to industries with the greatest productivity in each period.

Key findings and scenarios

• Education and trade can affect long-run growth positively by increasing worker adaptability and mobility.
• Depending on the initial ratio of general-to-specific human capital stock, multiple equilibrium growth paths can exist, including a poverty trap.
• If the ratio of general-to-specific human capital stock is not substantially low, trade liberalization can allow an economy in a poverty trap to transform into one with continuous education and higher output growth.

Policy implications and recommendations

• Foster general education to enhance workforce mobility across sectors.
• Pursue trade liberalization as a complement to education policies, particularly where general human capital is sufficient to enable sectoral mobility.
• Monitor the ratio of general-to-specific human capital stock as a key indicator of whether trade liberalization will yield sustained growth or leave an economy in a poverty trap.

Content in this bundle

• Growth Gains from Trade and Education -WP/99/23
  • Growth Gains from Trade and Education -WP/99/23 (Markdown version)
  • Growth Gains from Trade and Education -WP/99/23 (PDF)