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Globalisation, productive systems, and inequalities

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  • Gilles Duranton

Abstract

Using the idea that the division of labor is limited not only by the extent of the market but also by its heterogeneity, it is proposed in this paper that ''globalisation'' is redrawing the lines of division within and between countries. Our model builds on the concept of productive systems. Our results indicate that progressive trade integration among ''similar'' countries lead first to disparities between countries and then to convergence between nations but also to inequalities within nations (thus possibly accounting for the deterioration of the labor market situation of the unskilled). It is also shown that trade integration among rich economies and/or rising skills therein can lead to the marginalisation of poorer countries (thus possibly accounting for the convergence of countries in the world economy towards a twin-peaked distribution and the delinking of some countries from the world trading system).

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File URL: http://eprints.lse.ac.uk/20252/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 20252.

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Length: 27 pages
Date of creation: Sep 1998
Date of revision:
Handle: RePEc:ehl:lserod:20252

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Related research

Keywords: Productive Systems; Globalisation; Inequalities.;

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References

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  1. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  2. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November.
  3. Kevin M.Shleifer Murphy & Andrei, 1991. "Quality and Trade," University of Chicago - George G. Stigler Center for Study of Economy and State 66, Chicago - Center for Study of Economy and State.
  4. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
  5. Puga, Diego, 1997. "The Rise and Fall of Regional Inequalities," CEPR Discussion Papers 1575, C.E.P.R. Discussion Papers.
  6. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
  7. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  8. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  9. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
  10. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
  11. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-22, December.
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Cited by:
  1. Cigno, Alessandro & Rosati, Furio C. & Guarcello, Lorenzo, 2002. "Does Globalisation Increase Child Labour?," IZA Discussion Papers 470, Institute for the Study of Labor (IZA).

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