Technological Gap and Uneven Accumulation in a Classical Production Model

Two regions are distinguished by their technological capabilities. In autarky, the advanced region accumulates more rapidly. Trade augments both regions' growth rates, but can initially worsen the uneven accumulation. The advanced region's faster growth turns the terms of trade against itself. The growth gap narrows. Yet, trade can never close that gap completely. Further decline in the advanced region's growth rate is arrested by its investment in, and technology transfer to, the backward region to augment the latter's export. Whether uneven accumulation persists depends on how successfully the backward region's indigenous capitalists adopt the more efficient `foreign' technology.