<p>The concept of <strong>immiserizing growth</strong> describes a situation where a mainly exporter country that grows, finds itself worse-off because the terms of trade (relative prices) change too much against it.  </p>

<p>Immiserizing growth has generated some theoretical interest in the past, and various situations have been determined under which such a phenomenon may arise, enhancing the original contributions by<br>
<a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9957.1955.tb00960.x/full" rel="nofollow">Johnson, Harry G. 1955. "Economic Expansion and International Trade," Manchester School 23, pp. 95-112</a><br>
and<br>
<a href="http://www.jstor.org/stable/2295990" rel="nofollow">Bhagwati, Jagdish. 1958. "Immiserizing Growth: A Geometrical Note," Review of Economic Studies 25, (June), pp. 201-205.</a></p>

<p>I do not know of any real-world example though. On the contrary some studies have been conducted which have estimated the critical values for the variables of a real-world economy, in order for it to face the possibility of immiserizing growth-and these thresholds are not observed in practice.  </p>

<p>As an example, <strong>Ramon Lopez (1991)</strong>, in <a href="https://ideas.repec.org/p/wbk/wbrwps/665.html" rel="nofollow">"Microeconomic Distortions: Static Losses and their Effect on the Efficiency of Investment"</a>, studying the economy of Chile for the period 1974-1989, estimated that, under full employment, the critical tariff rate for the prospect of immiserizing growth to arise would be $185$%, while with unemployment, it would be $260$%, which are too high compared to observed tariff rates.</p>

<p>The real concern about International Trade is its <em>distributional effects inside each country</em>, i.e. whether it creates "misery" for <em>part</em> of the population, while benefiting some other part. This is also "immiserizing growth" (for some of the citizens) but not in the sense meant by the scholars that originally coined the term. </p>

CC BY-SA 3.0
2014-12-03T13:03:35.157Z
2015-12-27T15:02:48.093Z
2015-12-27T15:02:48.093Z
Alecos Papadopoulos
<p>For a course in international trade, our professor touched on the idea of <a href="http://en.wikipedia.org/wiki/Immiserizing_growth">immiserizering growth</a>.  He emphasized that immiserizing growth was a <strong>theoretical</strong> outcome from specialization of trade and did not provide the class with examples on the global market.<br>
What are some real world examples of immizerizing growth?</p>

<international-trade>
Does immiserizing growth exist outside of theory?
Mathematician
# Does immiserizing growth exist outside of theory?

(Asked by: username_0 on 2014-12-02)

For a course in international trade, our professor touched on the idea of [immiserizering growth](http://en.wikipedia.org/wiki/Immiserizing_growth). He emphasized that immiserizing growth was a **theoretical** outcome from specialization of trade and did not provide the class with examples on the global market.  
What are some real world examples of immizerizing growth?

**Tags:** international-trade

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## 1 answers

### Answer by username_1 on 2014-12-03. Score: 2 | Accepted answer

The concept of **immiserizing growth** describes a situation where a mainly exporter country that grows, finds itself worse-off because the terms of trade (relative prices) change too much against it.

Immiserizing growth has generated some theoretical interest in the past, and various situations have been determined under which such a phenomenon may arise, enhancing the original contributions by  
[Johnson, Harry G. 1955. "Economic Expansion and International Trade," Manchester School 23, pp. 95-112](http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9957.1955.tb00960.x/full)  
and  
[Bhagwati, Jagdish. 1958. "Immiserizing Growth: A Geometrical Note," Review of Economic Studies 25, (June), pp. 201-205.](http://www.jstor.org/stable/2295990)

I do not know of any real-world example though. On the contrary some studies have been conducted which have estimated the critical values for the variables of a real-world economy, in order for it to face the possibility of immiserizing growth-and these thresholds are not observed in practice.

As an example, **Ramon Lopez (1991)**, in ["Microeconomic Distortions: Static Losses and their Effect on the Efficiency of Investment"](https://ideas.repec.org/p/wbk/wbrwps/665.html), studying the economy of Chile for the period 1974-1989, estimated that, under full employment, the critical tariff rate for the prospect of immiserizing growth to arise would be $185$%, while with unemployment, it would be $260$%, which are too high compared to observed tariff rates.

The real concern about International Trade is its *distributional effects inside each country*, i.e. whether it creates "misery" for *part* of the population, while benefiting some other part. This is also "immiserizing growth" (for some of the citizens) but not in the sense meant by the scholars that originally coined the term.


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