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Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich? Author info | Abstract | Publisher info | Download info | Related research | Statistics Stephen Redding
Peter K. Schott
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This paper models the relationship between countries' distance from global economic activity, endogenous investments in education, and economic development. Firms in remote locations pay greater trade costs on both exports and intermediate imports, reducing the amount of value added left to remunerate domestic factors of production. If skill-intensive sectors have higher trade costs, more pervasive input-output linkages, or stronger increasing returns to scale, we show theoretically that remoteness depresses the skill premium and therefore incentives for human capital accumulation. Empirically, we exploit structural relationships from the model to demonstrate that countries with lower market access have lower levels of educational attainment. We also show that the world's most peripheral countries are becoming increasingly remote over time.
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Date of creation: Jan 2003Date of revision:
Handle: RePEc:nbr:nberwo:9447Note: ITIContact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A. Phone: 617-868-3900 Email: Web page: http://www.nber.org More information through EDIRC
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Article Paper 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) Stephen Redding & Peter K. Schott, 2003.
"Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich? ,"
CEP Discussion Papers
dp0572, Centre for Economic Performance, LSE.
[Downloadable!] Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
This paper has been announced in the following NEP Reports :
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