000 02718cam a22003137 4500
001 w2868
003 NBER
005 20211020114858.0
006 m o d
007 cr cnu||||||||
008 210910s1989 mau fo 000 0 eng d
100 1 _aAizenman, Joshua.
_94613
245 1 0 _aInward Versus Outward Growth Orientation in the Presence of Country Risk /
_cJoshua Aizenman.
260 _aCambridge, Mass.
_bNational Bureau of Economic Research
_c1989.
300 _a1 online resource:
_billustrations (black and white);
490 1 _aNBER working paper series
_vno. w2868
500 _aFebruary 1989.
520 3 _aThe purpose of this paper is to model the role of trade dependency in determining the access of a developing economy to the international credit market, and its desirable growth strategy. With full integration of capital markets the choice with respect to the inwardness of a technology is irrelevant: investment will be channeled to the more productive sectors, independently of their trade inwardness, With limited capital market integration a given investment will generate two effects. The first is the standard, direct productivity effect that is associated with the change in future output. The second is the trade dependency externality, generated by the change in future bargaining outcomes due to the change in the trade dependency of the nation. With partial integration, investment that increases trade dependency is desirable. If the credit markets are disjoint due to partial defaults, higher trade dependency is disadvantageous. Thus, higher trade dependency generates a positive externality with partial integration of capital markets, and a negative externality with disjoint credit markets. We show that credit market integration is determined by the size of the indebtedness relative to the trade dependency, as reflected by the repayment burden that is supported by the bargaining outcome. The repayment bargaining outcome is determined by the sectoral composition of the economy and by the effective size of the developing and the developed economies.
530 _aHardcopy version available to institutional subscribers
538 _aSystem requirements: Adobe [Acrobat] Reader required for PDF files.
538 _aMode of access: World Wide Web.
588 0 _aPrint version record
690 7 _aF - International Economics
_2Journal of Economic Literature class.
710 2 _aNational Bureau of Economic Research.
830 0 _aWorking Paper Series (National Bureau of Economic Research)
_vno. w2868.
856 4 0 _uhttps://www.nber.org/papers/w2868
856 _yAcceso en lĂ­nea al DOI
_uhttp://dx.doi.org/10.3386/w2868
942 _2ddc
_cW-PAPER
999 _c345665
_d304227