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IT, Production Specialization, and Division of Labor: A Smith-Ricardo Model of International Trade

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Author Info
Zhihao Yu () (Department of Economics, Carleton University)

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Abstract

A simple Smith-Ricardo model is developed that incorporates division of labor into the continuum-good Ricardian model of Dornbusch et al.(1977). The trade-o .between the e .ciency gain and coordination cost associated with production specialization de-termines the e .cient level of division of labor. The model is applied to explain how the recent IT revolution could a .ect a country’s e .cient level of production specialization and competitive advantage. In particular, absolute advantage (in division of labor) and relative labor supply plays a crucial role in determining the e .ects of an IT progress on a country’s competitive margin in international trade.

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Publisher Info
Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 03-06.

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Length: 20 pages
Date of creation: 25 Jun 2003
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Publication status: Published: Carleton Economic Paper
Handle: RePEc:car:carecp:03-06

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Related research
Keywords: Division of labor; Production specialization; Information technology; Coordination cost; International Trade;

Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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