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Why are a Third of People Indian and Chinese? Trade, Industrialization and Demographic Transition

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Author Info
Galor, Oded
Mountford, Andrew

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Abstract

This research argues that international trade has played a significant role in the timing of demographic transitions across countries and has thereby been a major determinant of the distribution of world population and a prime cause of sustained differences in population growth and income levels across countries. In industrial economies international trade enhanced the specialization in the production of skilled-intensive goods and stimulated technological progress. The rise in the demand for skilled labour induced an investment in the quality of the population, expediting the demographic transition, stimulating technological progress and further enhancing the comparative advantage of these industrial economies in the production of skilled intensive goods. In non-industrial economies, in contrast, the specialization in the production of unskilled-intensive goods that was brought about by international trade reduced the demand for skilled labour and provided limited incentives to invest in population quality. The demographic transition was therefore delayed, increasing further the abundance of unskilled labour in these economies and enhancing their comparative disadvantage in the production of skilled intensive goods. International trade has therefore widened the gap between the technological level as well as the skill abundance of industrial and non-industrial economies, enhancing the initial patterns of comparative advantage and generating sustained differences in income per capita across countries.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3136.

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Date of creation: Jan 2002
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Handle: RePEc:cpr:ceprdp:3136

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Related research
Keywords: demographic transition growth human capital industrial revolution international trade

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Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
N30 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - General, International, or Comparative
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nils-Petter Lagerlof, 2002. "The Roads To and From Serfdom," Macroeconomics 0212011, EconWPA. [Downloadable!]
    Other versions:
  2. Redding, Stephen J & Schott, Peter, 2003. "Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?," CEPR Discussion Papers 3739, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Nils-Petter Lagerloef, 2002. "Mortality and early growth in England, France, and Sweden," Macroeconomics 0212010, EconWPA. [Downloadable!]
    Other versions:
  4. Andrei A. Levchenko, 2004. "Institutional Quality and International Trade," IMF Working Papers 04/231, International Monetary Fund. [Downloadable!]
    Other versions:
  5. Alejandro Cuñat & Marco Maffezzoli, . "Trade Integration and Growth," Working Papers 220, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
  6. Howard Petith, 2005. "Capitalism, Unemployment and the Transition to the Contemporary Pattern of Growth," UFAE and IAE Working Papers 649.05, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
  7. Kevin H. O'Rourke & Jeffrey G. Williamson, 2002. "From Malthus to Ohlin: Trade, Growth and Distribution Since 1500," CEG Working Papers 20023, Trinity College Dublin, Department of Economics. [Downloadable!]
    Other versions:
  8. Acemoglu, Daron & Johnson, Simon H. & Robinson, James A., 2003. "The Rise of Europe: Atlantic Trade, Institutioanl Change and Economic Growth," Working papers 4269-02, Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
    Other versions:
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