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Globalisation, productive systems, and inequalities


  • Duranton, Gilles


Using the idea that the division of labor is limited not only by the extent of the market but also by its heterogeneity, it is proposed in this paper that ''globalisation'' is redrawing the lines of division within and between countries. Our model builds on the concept of productive systems. Our results indicate that progressive trade integration among ''similar'' countries lead first to disparities between countries and then to convergence between nations but also to inequalities within nations (thus possibly accounting for the deterioration of the labor market situation of the unskilled). It is also shown that trade integration among rich economies and/or rising skills therein can lead to the marginalisation of poorer countries (thus possibly accounting for the convergence of countries in the world economy towards a twin-peaked distribution and the delinking of some countries from the world trading system).

Suggested Citation

  • Duranton, Gilles, 1998. "Globalisation, productive systems, and inequalities," LSE Research Online Documents on Economics 20252, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:20252

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    References listed on IDEAS

    1. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
    2. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
    3. Murphy, Kevin M. & Shleifer, Andrei, 1997. "Quality and trade," Journal of Development Economics, Elsevier, vol. 53(1), pages 1-15, June.
    4. repec:hrv:faseco:30722111 is not listed on IDEAS
    5. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
    6. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
    7. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
    8. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    9. Wood Júnior, Thomaz, 1995. "Workers," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 35(2), March.
    10. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
    11. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December.
    12. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    13. Dan Ben-David, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 653-679.
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    Cited by:

    1. Cigno, Alessandro & Rosati, Furio C. & Guarcello, Lorenzo, 2002. "Does Globalization Increase Child Labor?," World Development, Elsevier, vol. 30(9), pages 1579-1589, September.

    More about this item


    Productive Systems; Globalisation; Inequalities.;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation


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