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Globalization and economic development

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  • Sven Arndt

Abstract

A feature of the continuing integration of the world economy is the globalization of production and the consequent rise of trade in parts and components. Products are more internationalized and less identified with any particular country. Non-trivial shares of the value-added of many exports consist of imports and vice versa. Extension of the international division of labour beyond finished products offers developing countries a broader range of choices for industrialization. This paper explores the implications of these developments in the context of a standard trade model. Component specialization in a developing country's import sector is shown to be superior in overall welfare terms to specialization in the integrated product. Output and employment are higher in the sector, but the wage-rental ratio is lower.

Suggested Citation

  • Sven Arndt, 1999. "Globalization and economic development," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(3), pages 309-318.
  • Handle: RePEc:taf:jitecd:v:8:y:1999:i:3:p:309-318
    DOI: 10.1080/09638199900000018
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    Citations

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    Cited by:

    1. Ravi Batra & Hamid Beladi, 2010. "A Simple Two-Sector Model of Outsourcing," Review of Development Economics, Wiley Blackwell, vol. 14(1), pages 64-73, February.
    2. Ingo Geishecker & Holger Görg & Jakob Roland Munch, "undated". "Do Labour Market Institutions Matter? Micro-level Wage Effects of International Outsourcing in Three European Countries," Discussion Papers 07/42, University of Nottingham, GEP.
    3. Rosario Crinò, 2007. "Offshoring, Multinationals and Labor Market: A Review of the Empirical Literature," KITeS Working Papers 196, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jan 2007.
    4. Geishecker, Ingo & Gorg, Holger, 2005. "Do unskilled workers always lose from fragmentation?," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 81-92, March.
    5. Miller, Tracy C., 2001. "Impact of globalization on U.S. wage inequality: Implications for policy," The North American Journal of Economics and Finance, Elsevier, vol. 12(3), pages 219-242, November.
    6. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    7. Robert Stehrer, 2004. "Can Trade Explain the Sector Bias of Skill-biased Technical Change?," wiiw Working Papers 30, The Vienna Institute for International Economic Studies, wiiw.
    8. Geishecker, Ingo, 2008. "The impact of international outsourcing on individual employment security: A micro-level analysis," Labour Economics, Elsevier, vol. 15(3), pages 291-314, June.
    9. repec:wfo:wstudy:26490 is not listed on IDEAS
    10. Egger, Peter & Pfaffermayr, Michael & Wolfmayr-Schnitzer, Yvonne, 2001. "The international fragmentation of Austrian manufacturing: The effects of outsourcing on productivity and wages," The North American Journal of Economics and Finance, Elsevier, vol. 12(3), pages 257-272, November.
    11. Kurt Kratena & Michael Wüger, 2001. ""Outsourcing", Competitiveness and Employment. Effects Estimated with a Sector Model of Austrian Manufacturing," WIFO Monatsberichte (monthly reports), WIFO, vol. 74(4), pages 269-280, April.
    12. Kohler, Wilhelm, 2001. "A specific-factors view on outsourcing," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 31-53, March.
    13. Geishecker, Ingo & Riedl, Maximilian & Frijters, Paul, 2012. "Offshoring and job loss fears: An econometric analysis of individual perceptions," Labour Economics, Elsevier, vol. 19(5), pages 738-747.
    14. Ravi Batra & Hamid Beladi, 2010. "Outsourcing and the Heckscher-Ohlin Model," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 277-288, May.
    15. Egger, Hartmut & Egger, Peter, 2001. "Cross-border sourcing and outward processing in EU manufacturing," The North American Journal of Economics and Finance, Elsevier, vol. 12(3), pages 243-256, November.
    16. Pangarkar, Nitin & Wu, Jie, 2012. "Industry globalization and the performance of emerging market firms: Evidence from China," International Business Review, Elsevier, vol. 21(2), pages 196-209.

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