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Specialization, Product Development, Evolution of the Institution of the Firm, and Economic Growth

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  • Borland, Jeff
  • Yang, Xiaokai

Abstract

This paper considers the effects of the division of labor on economic growth and welfare in a general equilibrium environment where changes in individual specialization and product development can proceed simultaneously. The nature of the dynamic equilibrium is shown to depend on the interaction of transaction efficiency, economies of specialization, and economies of complementarity. Where the dynamic equilibrium involves evolution in the division of labor, this will be associated with increased per capita real income and hence economic growth. It is also shown that the emergence of firms is an aspect of the evolution of division of labor if transaction efficiency for a producer good is lower than that for labor used to produce this good.

Suggested Citation

  • Borland, Jeff & Yang, Xiaokai, 1995. "Specialization, Product Development, Evolution of the Institution of the Firm, and Economic Growth," Journal of Evolutionary Economics, Springer, vol. 5(1), pages 19-42, February.
  • Handle: RePEc:spr:joevec:v:5:y:1995:i:1:p:19-42
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    Cited by:

    1. Xiaokai Yang, 2006. "The Division Of Labor, Investment And Capital," World Scientific Book Chapters,in: Inframarginal Contributions To Development Economics, chapter 16, pages 409-436 World Scientific Publishing Co. Pte. Ltd..
    2. Sahoo, Biresh K. & Tone, Kaoru, 2013. "Non-parametric measurement of economies of scale and scope in non-competitive environment with price uncertainty," Omega, Elsevier, vol. 41(1), pages 97-111.
    3. Pak-Wai Liu & Xiaokai Yang, 1999. "Division of Labor, Transaction Cost, Emergence of the Firm and Firm Size," CID Working Papers 10, Center for International Development at Harvard University.
    4. Xiaokai Yang, 2000. "Incomplete Contingent Labor Contract, Asymmetric Residual Rights and Authority, and the Theory of the Firm," CID Working Papers 45, Center for International Development at Harvard University.
    5. Pak-Wai Liu & Xiaokai Yang, 2006. "The Theory Of Irrelevance Of The Size Of The Firm," World Scientific Book Chapters,in: Inframarginal Contributions To Development Economics, chapter 11, pages 259-290 World Scientific Publishing Co. Pte. Ltd..
    6. Cheng, Wenli & Yang, Xiaokai, 2004. "Inframarginal analysis of division of labor: A survey," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 137-174, October.

    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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