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Free trade and income redistribution in some developing and newly industrialized countries


  • Henry Thompson


A competitive general equilibrium model of production is specified and the long-run comparative static elasticities of changing prices on factor prices are examined in eight developing and newly industrialized countries. Unskilled labor in these developing countries stands to gain from a program of global free trade characterized by increased manufacturing exports and falling prices of imported business services, while capital owners and skilled labor lose. Results are contrasted with developed countries, the United States in particular, where unskilled labor will lose while capital and skilled labor enjoy gains with global free trade. Copyright Kluwer Academic Publishers 1995

Suggested Citation

  • Henry Thompson, 1995. "Free trade and income redistribution in some developing and newly industrialized countries," Open Economies Review, Springer, vol. 6(3), pages 265-280, July.
  • Handle: RePEc:kap:openec:v:6:y:1995:i:3:p:265-280
    DOI: 10.1007/BF01000085

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    References listed on IDEAS

    1. Ruffin, Roy J., 1981. "Trade and factor movements with three factors and two goods," Economics Letters, Elsevier, vol. 7(2), pages 177-182.
    2. Chang, Winston W, 1979. "Some Theorems of Trade and General Equilibrium with Many Goods and Factors," Econometrica, Econometric Society, vol. 47(3), pages 709-726, May.
    3. Clark, Don P & Thompson, Henry, 1990. "Factor Migration and Income Distribution in Some Developing Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 42(2), pages 131-140, April.
    4. Hal B. Lary, 1968. "Imports of Manufactures from Less Developed Countries," NBER Books, National Bureau of Economic Research, Inc, number lary68-1, January.
    5. Edward E. Leamer, 1992. "Wage Effects of A U.S. - Mexican Free Trade Agreement," NBER Working Papers 3991, National Bureau of Economic Research, Inc.
    6. Jones, Ronald W. & Easton, Stephen T., 1983. "Factor intensities and factor substitution in general equilibrium," Journal of International Economics, Elsevier, vol. 15(1-2), pages 65-99, August.
    7. Ronald W. Jones, 1965. "The Structure of Simple General Equilibrium Models," Journal of Political Economy, University of Chicago Press, vol. 73, pages 557-557.
    8. Henry Thompson, 1985. "Complementarity in a Simple General Equilibrium Production Model," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 616-621, August.
    9. Isbister, John, 1971. "Urban Employment and Wages in a Developing Economy: The Case of Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 20(1), pages 24-46, October.
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    Cited by:

    1. Xiaokai Yang & Dingsheng Zhang, 1999. "International Trade and Income Distribution," CID Working Papers 18A, Center for International Development at Harvard University.
    2. Toledo, Hugo, 2017. "The IA-CEPA and sector adjustments: A specific-factors model of production," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 201-211.
    3. Michael Thompson, 2002. "Trade and Foreign Capital: Income Redistribution in Simulated Trade Models," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0208, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Akhilesh Chandra Prabhakar, 2011. "Poverty and Inequality: The New Dynamic of History," Journal of Asian Scientific Research, Asian Economic and Social Society, vol. 1(1), pages 18-26, May.
    5. Toledo, Hugo, 2011. "EU-GCC free trade agreement: Adjustments in a factors proportion model for the UAE," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 248-256, April.


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