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

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  • Jang Ping Thia
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    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.

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    Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0875.

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    Date of creation: Jun 2008
    Handle: RePEc:cep:cepdps:dp0875
    Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

    Keywords: Agglomeration; Wage Inequality; Globalisation;

    Find related papers by 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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