GLOBAL SOCIAL STATUS, NATIONAL SPIRITS OF CAPITALISM, AND ECONOMIC DEVELOPMENT

Abstract

This paper constructs a global economic growth model with endogenous social status, endogenous preferences, and wealth accumulation. The economic system is based the Solow model, the Uzawa two-sector model, and the Oniki-Uzawa trade model. We base our approach to measuring social status on some ideas in the literature of economic growth with endogenous growth. The model is specially based on a model proposed by Zhang (2016). This study considers relative social status as a function of a country’s relative wealth per household with the global average per household wealth. It treats time distribution between leisure and work as endogenous variables. The world economy is composed of any number of national economies and each national economy consists of one capital goods sector and one consumer goods sector. National economies differ in social status, preferences, spirits of capitalism, and productivities. We build the model for J -country world economy and express the dynamics with J differential equations. We simulate the movement of a 3-country global economy and carried out comparative dynamic analysis with regard to some parameters