Law Commons^™

Optimal Policies And Immiserizing Growth, Jagdish N. Bhagwati

Faculty Scholarship

In 1958, I analysed the paradoxical case of "immiserizing growth" [2] where a country, with monopoly power in trade, found that the growth-induced deterioration in its terms of trade implied a sufficiently large loss of welfare to outweigh the primary gain from growth. An obvious corollary of this proposition was that, if the country imposed an optimum tariff (either in both the pre-growth and the post-growth situations, or in the latter situation alone), this paradox would be eliminated.

James Melvin, in an interesting note [5], has now produced yet another analysis of immiserizing growth, where demand differences of the factor-intensity-reversals …