GROWTH WITH IMPORTED CAPITAL GOODS, LIMITED EXPORT DEMAND AND FOREIGNDEBT

In this paper the implications of introducing imported inputs and elas ticities of export demand into the neoclassical growth model for the a nalysis of long-run growth are shown. Rates of growth of per capita co nsumption depend not only on the rates of interest and time preference but also on the terms of trade and will in general not be equalized a cross countries through international trade and capital movements. Und er low interest rates and strong world economic growth per capita inco me, real wages, capital-labor ratio and the terms of trade grow faster if income elasticities of exports and the growth rate of world income are higher. If creditors ration debt to the level of the capital stoc k classical growth results are obtained.