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Evolution of Locations, Specialisation and Factor Returns with Two Distinct Waves of Globalisation

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  • Jang Ping Thia

Abstract

This paper presents an economic geography model with two differentiated sectors that exhibit weaker inter and stronger intra-industry input-output linkages. Labour is also differentiated according to skills in a hierarchy of tasks they can perform. Globalisation occurs in two distinct phases, leading to the agglomeration of an industry (manufacturing) in the first wave, which is subsequently displaced by the other industry (services) when the second wave of globalisation takes place. Because of agglomeration effects, the increase in relative endowment of a factor may increase its relative wages, leading to more inequality. Within and between nations inequality can result.

Suggested Citation

  • Jang Ping Thia, 2008. "Evolution of Locations, Specialisation and Factor Returns with Two Distinct Waves of Globalisation," CEP Discussion Papers dp0875, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0875
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    Keywords

    Agglomeration; Wage Inequality; Globalisation;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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