The Fallacy of Composition: A Review of the Literature
AbstractThis paper reviews the literature on the fallacy of composition with an emphasis on labour-intensive manufactures. It briefly addresses the protectionist and the partial-equilibrium versions of the argument before focusing on general-equilibrium considerations and the debate on the manufactures terms of trade of developing countries. The review indicates a potential fallacy of composition problem in labour-intensive manufactures, where competition among different groups of developing countries for export market shares may constitute a new form of the fallacy of composition. The likelihood of a country that exports labour-intensive manufactures to become subject to the fallacy of composition rises with the increasing integration of several strongly populated low-income countries into world markets, while it declines with continuous structural change and favourable aggregate demand conditions particularly in developed and the advanced developing countries. Copyright Blackwell Publishers Ltd 2002.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The World Economy.
Volume (Year): 25 (2002)
Issue (Month): 6 (06)
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Other versions of this item:
- Jörg Mayer, 2003. "The Fallacy Of Composition: A Review Of The Literature," UNCTAD Discussion Papers, United Nations Conference on Trade and Development 166, United Nations Conference on Trade and Development.
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