The World Income Distribution
We show that even in the absence of diminishing returns in production and technological spillovers, international trade leads to a stable world income distribution. This is because specialization and trade introduce de facto diminishing returns: countries that accumulate capital faster than average experience declining export prices, depressing the rate of return to capital and discouraging further accumulation. Because of constant returns to capital accumulation from a global perspective, the world growth rate is determined by policies, savings, and technologies, as in endogenous growth models. Because of diminishing returns to capital accumulation at the country level, the cross-sectional behavior of the world economy is similar to that of existing exogenous growth models: cross-country variation in economic policies, savings, and technology translate into crosscountry variation in incomes. The dispersion of the world income distribution is determined by the forces that shape the strength of the terms-of-trade effects- the degree of openness to international trade and the extent of specialization. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Volume (Year): 117 (2002)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00335533|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- N. Gregory Mankiw, 1995.
"The Growth of Nations,"
Harvard Institute of Economic Research Working Papers
1732, Harvard - Institute of Economic Research.
- Charles I. Jones, .
"On the Evolution of the World Income Distribution,"
97009, Stanford University, Department of Economics.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Acemoglu, Daron & Zilibotti, Fabrizio, 2000.
CEPR Discussion Papers
2498, C.E.P.R. Discussion Papers.
- Acemoglu, D. & Zilibotti, F., 1998. "Productivity Differences," Papers 660, Stockholm - International Economic Studies.
- Acemoglu, Daron & Zilibotti, Fabrizio, 1998. "Productivity Differences," Seminar Papers 660, Stockholm University, Institute for International Economic Studies.
- Daron Acemoglu & Fabrizio Zilbotti, 1999. "Productivity Differences," NBER Working Papers 6879, National Bureau of Economic Research, Inc.
- Elhanan Helpman & David T. Coe, 1993. "International RandD Spillovers," IMF Working Papers 93/84, International Monetary Fund.
- Robert J. Barro, 1996.
"Determinants of Economic Growth: A Cross-Country Empirical Study,"
NBER Working Papers
5698, National Bureau of Economic Research, Inc.
- Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, June.
- Hummels, David & Levinsohn, James, 1995.
"Monopolistic Competition and International Trade: Reconsidering the Evidence,"
The Quarterly Journal of Economics,
MIT Press, vol. 110(3), pages 799-836, August.
- Hummels, D. & Levinsohn, J., 1993. "Monopolistic Competition and International Trade: Reconsidering the Evidence," Working Papers 339, Research Seminar in International Economics, University of Michigan.
- David Hummels & James Levinsohn, 1993. "Monopolistic Competition and International Trade: Reconsidering the Evidence," NBER Working Papers 4389, National Bureau of Economic Research, Inc.
- Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:tpr:qjecon:v:117:y:2002:i:2:p:659-694. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Pollock-Nelson)
If references are entirely missing, you can add them using this form.