IDEAS home Printed from https://ideas.repec.org/a/taf/intecj/v24y2010i3p283-296.html
   My bibliography  Save this article

A Story of Trade-induced Industrialization

Author

Listed:
  • Alan Deardorff
  • Jee-Hyeong Park

Abstract

We offer a simple variant of the standard Heckscher-Ohlin Model that explains how a developing country, by opening up to trade with a large capital-abundant economy, can be induced to shift resources into more capital-intensive production than that which it was producing in autarky. As a result, it experiences a rise in its return to capital and, if capital is internationally mobile, both an increase in its capital stock and an increase in trade. These results arise in a model in which both a traditional and a modern sector can produce final goods that are perfect substitutes. The modern sector uses intermediate inputs that differ in their relative capital intensities, while being both more capital intensive than the traditional sector. The results of this model accord well with the experience of the Asian Tiger economies during the early decades of their export-oriented industrialization.

Suggested Citation

  • Alan Deardorff & Jee-Hyeong Park, 2010. "A Story of Trade-induced Industrialization," International Economic Journal, Taylor & Francis Journals, vol. 24(3), pages 283-296.
    • Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:283-296
    DOI: 10.1080/10168737.2010.503457
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.503457
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10168737.2010.503457?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Davis, Donald, 1996. "Trade Liberalization And Income Distribution," Harvard Institute for International Development (HIID) Papers 294371, Harvard University, Kennedy School of Government.
    2. Donald R. Davis, 1996. "Trade Liberalization and Income Distribution," Harvard Institute of Economic Research Working Papers 1769, Harvard - Institute of Economic Research.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marjan Petreski & Branimir Jovanovic & Igor Velickovski, 2017. "Tariff-Induced (De)industrialization: An Empirical Analysis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(3), pages 345-381, September.
    2. Teignier, Marc, 2018. "The role of trade in structural transformation," Journal of Development Economics, Elsevier, vol. 130(C), pages 45-65.
    3. Branimir Jovanović & Marjan Petreski & Igor Velickovski, 2015. "Tariff-induced (de)industrialization in transition economies: A comparative analysis," wiiw Balkan Observatory Working Papers 116, The Vienna Institute for International Economic Studies, wiiw.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ilo:ilowps:366690 is not listed on IDEAS
    2. Paolo Epifani & Gino Gancia, 2008. "The Skill Bias of World Trade," Economic Journal, Royal Economic Society, vol. 118(530), pages 927-960, July.
    3. Julien Gourdon, 2011. "Wage inequality in developing countries: South–South trade matters," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(4), pages 359-383, December.
    4. Rodolfo Helg & Riccardo Faini & Anna M. Falzoni & Marzio Galeotti & Alessandro Turrini, 2001. "Importing Jobs And Exporting Firms? On The Wage And Employment Implications Of Italy’S Trade And Foreign Direct Investment Flows," International Trade 0103001, University Library of Munich, Germany.
    5. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    6. Chiara Binelli, 2008. "Returns to Education and Increasing Wage Inequality in Latin America," Working Paper series 30_08, Rimini Centre for Economic Analysis.
    7. Sampson, Thomas, 2016. "Assignment reversals: Trade, skill allocation and wage inequality," Journal of Economic Theory, Elsevier, vol. 163(C), pages 365-409.
    8. Paulo Bastos & Odd Rune Straume, 2012. "Globalization, product differentiation, and wage inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 857-878, August.
    9. Ebney Ayaj Rana & Mustafa Kamal, 2018. "Does Clientelism Affect Income Inequality? Evidence from Panel Data," Journal of Income Distribution, Ad libros publications inc., vol. 26(1), pages 1-24, March.
    10. Bruno Cesar Araujo & Francesco Bogliacino & Marco Vivarelli, 2009. "The Role of "Skill enhancing Trade" in Brazil: Some Evidence from Microdata," Jena Economics Research Papers 2009-041, Friedrich-Schiller-University Jena.
    11. Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 74(1), pages 70-93, January.
    12. K. H. O'Rourke & R. Sinnott, 2001. "The Determinants of Individual Trade Policy Preferences: International Survey Evidence," Trinity Economics Papers 200110, Trinity College Dublin, Department of Economics.
    13. Jim Airola, 2008. "A Regional Analysis of the Impact of Trade and Foreign Direct Investment on Wages in Mexico, 1984–2000," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 276-290, May.
    14. Green, Francis & Dickerson, Andy & Saba Arbache, Jorge, 2001. "A Picture of Wage Inequality and the Allocation of Labor Through a Period of Trade Liberalization: The Case of Brazil," World Development, Elsevier, vol. 29(11), pages 1923-1939, November.
    15. Jorge Saba Arbache, 2001. "Trade Liberalisation and Labor Markets in Developing Countries: Theory and Evidence," Studies in Economics 0112, School of Economics, University of Kent.
    16. Christian Volpe Martincus & Antoni Estevadeordal, 2009. "Trade Policy and Specialization," IDB Publications (Working Papers) 9289, Inter-American Development Bank.
    17. Kishan P K V, 2017. "Globalization and Inequality- A Pathway Through Education (Revised as on 02.04.18)," IIMA Working Papers WP 2017-09-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    18. Matthew Higgins & Jeffrey G. Williamson, 1999. "Explaining Inequality the World Round: Cohort Size, Kuznets Curves, andOpenness," NBER Working Papers 7224, National Bureau of Economic Research, Inc.
    19. Michael Gavin & Ricardo Hausmann, 1998. "Naturaleza, desarrollo y distribución en América Latina. Elementos de juicio sobre el papel de la geografía, el clima y los recursos naturales," Research Department Publications 4129, Inter-American Development Bank, Research Department.
    20. Shrimoyee Ganguly & Rajat Acharyya, 2021. "Trade liberalization, export quality, and three dimensions of wage inequality," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2157-2179, November.
    21. Petia Topalova, 2010. "Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty from India," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 1-41, October.

    More about this item

    Keywords

    Industrialization; trade; intermediate inputs; Heckscher-Ohlin Model; Asian Tiger economies;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:283-296. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RIEJ20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.