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Quality, Trade and the Moving Window: The Globalisation Process

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  • John Sutton

Abstract

The globalisation process is analysed in a model where firms differ in productivity and quality. A lower bound to quality emerges, below which firms cannot sell, however low their (local) wage rate. The range of quality levels between the maximum and this lower bound shifts upwards when trade is liberalised (the 'moving window'). The initial phase of globalisation, associated with trade liberalisation, in an initially segmented (but not autarkic) world, may reduce welfare in countries with intermediate levels of capability, but these countries may be the most important gainers as capabilities are transferred in subsequent phases. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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  • John Sutton, 2007. "Quality, Trade and the Moving Window: The Globalisation Process," Economic Journal, Royal Economic Society, vol. 117(524), pages 469-498, November.
  • Handle: RePEc:ecj:econjl:v:117:y:2007:i:524:p:f469-f498
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