International trade equalizes growth rates, stabilizing countries' relative GDPs forever.
International trade and economic growth can impact how countries' GDPs evolve over time. A theory combining growth models and trade models shows that trade in intermediate goods can influence countries' growth rates. Depending on certain conditions, trade can either equalize countries' growth rates, bring them into equality eventually, or lead to some countries growing faster than others indefinitely. This model offers insights into the dynamics of world income distribution and has been supported by initial test results.