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IT, Production Specialization, and Division of Labor: A Smith-Ricardo Model of International Trade

Abstract

A simple Smith-Ricardo model is developed that incorporates division of labor into the continuum-good Ricardian model of Dornbusch et al.(1977). The trade off between the efficiency gain and coordination cost associated with production specialization de-termines the efficient level of division of labor. The model is applied to explain how the recent IT revolution could affect a country’s efficient level of production specialization and competitive advantage. In particular, absolute advantage (in division of labor) and relative labor supply plays a crucial role in determining the effects of an IT progress on a country’s competitive margin in international trade.

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Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 03-06.

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Length: 20 pages
Date of creation: 25 Jun 2003
Date of revision:
Publication status: Published: Carleton Economic Papers
Handle: RePEc:car:carecp:03-06
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Keywords: Division of labor; Production specialization; Information technology; Coordination cost; International Trade;

Find related papers by JEL classification:

  • F10 - International Economics - - Trade - - - General
  • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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  2. Robert C. Feenstra, . "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics 98-06, California Davis - Department of Economics.
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