BALANCED AND UNBALANCED GROWTH (VOL 53, PG 41, 1997)

A model is developed that shows how two sectors or regions interact ou t of steady state through product, labor, and capital markets, and how if the former interaction dominates the growth of one sector ''pulls along'' the growth of the other, while if the latter interactions domi nate one sector or region booms while the other declines. It is then s hown why Liberalization of foreign trade should lead to a transition f rom a lower to a higher steady state growth rate and why, during the c ourse of this transition, growth might initially be even slower than b efore liberalization. (C) 1997 Elsevier Science B.V.